Report Third Quarter 2002 Consolidated Closing (US-GAAP) for the First Nine Months 2002, as of 30.09.2002 (unaudited) 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Dear Ladies and Gentlemen, By the end of September 2002, SINGULUS TECHNOLOGIES was able to clearly increase its revenues and order intake over the prior year s third quarter as well as the cumulative 9-month period in 2001. The order backlog at the end of September 2002 also improved significantly over the same period last year. Both gross revenues for Quarter III/2002 totaling 99.2 million Euro as well as EBIT of 21.9 million Euro surpassed our projections and we anticipate that fiscal year 2002 results will exceed our expectations. The recently introduced systems for once-recordable DVD-R and Super Audio CD (SACD) enhance our portfolio by adding innovative products associated with high expectations for future success. Klaus Hammen was appointed to the Managing Board assuming responsibility for R&D, Marketing and Sales. REVENUES Cumulative revenues for the first 9 months of the current fiscal year totaled 209.5 million Euro compared to 175.8 million Euro for the same period last year. Third quarter gross revenues of 99.2 million Euro in 2002 surpassed the previous year s third quarter revenues (56.8 million Euro) as well as QIII/2001 revenues (71.3 million Euro). Categorized by product segments, the following revenues were achieved for the first 9 months of the current fiscal year: CD machines, 38.3 million Euro (prior year 72.7 million Euro); DVD machines, 123.5 million Euro (69.6 million Euro last year); CD-R/DVD-R machines, 10.1 million Euro (prior year 13.6 million Euro); RW machines, 1.2 million Euro (prior year 0 million Euro); OEM metallizers, 3.7 million Euro (prior year 4.1 million Euro); and Service, 20.3 million Euro (15.8 million Euro last year). Revenues from the OEM injection molding machine business 2.3 million Euro and mastering systems revenues 10.1 million Euro are included in the current fiscal year figures for the first time. The regional distribution of sales for the first nine months of 2002 is summarized as follows: Germany, 6.8 % (prior year 4.2 %); remainder of Europe 31 % (25.9 % last year); North and South America, 31.6 % (prior year 26.3 %); Asia, 30.6 % (43.6 % in 2001).
Quarterly Report Replication Line STREAMLINE DVDR/SP for the Production of recordable DVD (DVD-R and DVD+R) BOOKINGS AND ORDER BACKLOG At 72.6 million Euro, the QIII/2002 order intake surpassed the third quarter of 2001 (47.3 million Euro). The following operating figures were calculated on a cumulative annual basis as it has been demonstrated in the past that our business is not evenly distributed over the course of a calendar year; instead it has traditionally been characterized by increased orders during the first half of the year and higher revenues during the second half of the year. Order intake during the first 9 months rose to 242.2 million Euro (prior year 155.9 million Euro). The book-to-bill ratio for the first 9 months remained clearly positive at 1.16. At the close of the period on 9/30/02, the order backlog totaled 88.4 million Euro. Adjusted by a major order, the order backlog at the close of the same prior year period was 54.0 million Euro. The composition of the order backlog continued its shift toward DVD products and is now comprised of 46 CD machines, 56 DVD machines, 16 CD-R/DVD ± R machines and 2 DVD ± RW machines. 2 EARNINGS SINGULUS TECHNOLOGIES profitability remains at a very high level. During the first 9 months of the current fiscal year, the gross margin rose to 36.1 % (prior year period 34.5 %). The increase in the gross margin in QIII/2002 = 36,2 % is also apparent when compared to QIII/2001 (prior year period 35.6 %). This positive development can be attributed in large part to the shift in product mix now more heavily weighted towards the higher-margin DVD machines. Operating expenses for the first 9 months of this fiscal year rose to their current level of 31.2 million Euro (prior year 21.1 million Euro). The increase is largely the result of increased expenditures for R&D as well as additional outlays for the newly consolidated SINGULUS EMOULD and SINGULUS OMP companies. Preparatory work for the build-up of the new sector for MRAM systems is also included in these figures. The EBIT for 9 months totals 41.0 million Euro (prior year 35.7 million Euro); net income totals 27.2 million Euro (prior year 22.7 million Euro). MANAGING BOARD The Supervisory Board appointed Klaus Hammen (35) to the Managing Board effective September 2, 2002, where he will assume responsibility for R&D, Marketing and Sales. After joining the company in February 2000, Mr. Hammen became Technical Director of Engineering, Production, and Logistics; he is now also the Managing Director of SINGULUS EMOULD. Company co-founder Reiner Seiler (63), will retire on October 31, 2002 after 7 years of service to the company as Executive Vice President and member of the Managing Board. Reiner Seiler was instrumental in SINGULUS TECHNOLOGIES rise to global market leader for optical disc replication systems. The company extends its sincere thanks to Mr. Seiler for his excellent contributions. Managing Board Director Roland Lacher s 5-year extension of his contract ensures a progressive generational transition in the company s leadership.
STAFF On 9/30/02, SINGULUS TECHNOLOGIES workforce numbered 472 employees worldwide, 3.5 % more than the previous quarter. The increase is the result of investment in additional R&D resources as well as the personnel increase needed for the Commissioning and Service departments. SPACELINE SACD for the Production of new Super Audio CD (left side: process chamber with Ion source.) RESEARCH AND DEVELOPMENT At 9.3 million Euro, SINGULUS TECHNOLOGIES markedly inreased its R&D activity during the first 9 months of this fiscal year (prior year 4.4 million Euro); this expense accounts for 4.7 % of revenues. Two newly-designed products were introduced during the 2nd quarter of 2002. Based on the projected market growth of once-rewritable DVD-R lines, SINGULUS developed the STREAMLINE DVDR/SP, a newly conceived system for this segment of the market. The technological innovations affect improved process reliability as well as optimized cycle times. To this end, modules from the CD-R replication line with a newly-designed substrate cooling system were combined with the SPACELINE DVD replication line s proven metallizing and bonding components. Our objective is to build a technological advantage with a highly productive system concept thereby securing a significant position in the growth market for DVD-R machines. The first new systems have already been sold. 3 PHILIPS and SONY have developed the new Super Audio CD (SACD) disc format providing a significantly enhanced sound experience based on multichannel and surround sound technology. The ability to play this format on CD as well as DVD players is an additional advantage. In QIII/2002, SINGULUS TECHNOLOGIES became the first machine manufacturer to introduce an SACD replication line. The development of the system was achieved by working closely with a leading U.S. customer and is based on the dual-use SPACELINE system which is able to produce SACD s as well as DVD-5/9/10. The electronics companies involved in this technology forsee widespread distribution of the SACD format. In the new TMR/MRAM business sector, the transition from design concept to prototype remains on schedule. Recent statements made in the semi-conductor industry confirm that MRAM technology will play a pivotal role in the storage chip market of the future. Consequently our system concept has generated increased interest among leading customers in the chip industry. Initial orders are expected for 2003. STOCKS AND CORPORATE GOVERNANCE SINGULUS TECHNOLOGIES fundamental strength should once again be reflected in a robust share price. SINGULUS has therefore welcomed the reorganization of the stock market announced by the German Stock Exchange. We expect this measure to foster renewed trust in the financial markets. Following consultation with the German Stock Exchange in Frankfurt, the Managing Board expects that its request for admission into the Prime Standard s Technology Segment will be granted in full.
Quarterly Report Bonding Station in a SPACELINE SACD SINGULUS TECHNOLOGIES allied itself early with the principles of transparent and accountable leadership as well as corporate oversight. We were one of the first companies to voluntarily embrace the Corporate Governance principles set forth by the Federal Commission (Cromme Paper). SINGULUS exemplary investor relations work recently found recognition in the presentation of various awards by IR magazine and Wall Street Journal Europe including first place for the best IR work among European growth companies and first place for most consistent information policies among listed European companies. The financial publication Capital bestowed on SINGULUS TECHNOLOGIES its second place award for exemplary IR work in the Neuer Markt segment. 4 FORECAST The strong overall decline in the stock market has also had a negative impact on our stock. Nevertheless, our successful fundamental business as well as our earnings strength and competitiveness remain unaffected. With the close of the current quarter, SINGULUS TECHNOLOGIES reconfirms that the company s fundamental values and financial figures can be measured against even the best international companies. The marked 9-month rise in revenues and earnings over those of last year as well as the increase in order intake portend a very successful year 2002. This will confirm the claims expressed by the Managing Board at the beginning of the year projecting growth in earnings and revenues of at least 20 %. The Replication Expo 2002 trade show in Shanghai, China underscored the positive outlook for the future of the Asian market. In the mid-term, the Video CD largely disregarded in the west but pervasive in China, will be replaced by the DVD-5 and DVD-9 formats. Our goal for fiscal 2003 is to exceed our competitors participation in additional growth opportunities for prerecorded DVD as well as the budding future DVD ± R and DVD ± RW formats. During the next fiscal year, we intend to generate additional growth in the Mastering and Service segments as well as the new TMR-MRAM business sector. Best regards, SINGULUS TECHNOLOGIES AG The Managing Board
SINGULUS TECHNOLOGIES CONSOLIDATED BALANCE SHEET (US GAAP, unaudited) Year End 2001 Sept. 30, 2002 KEUR KEUR Cash and cash equivalents 47,431 41,409 Trade accounts receivable 61,214 91,427 Inventories 56,701 96,910 Other current assets 4,263 8,190 Total Current Assets 169,610 237,937 Property, plant & equipment 6,340 7,934 Intangible assets 484 500 Goodwill 3,217 14,957 Other long-term assets 2,981 1,889 Deferred tax assets 5,030 5,030 Total Assets 187,662 268,247 Trade accounts payable 14,495 35,621 Advance payments received 8,427 18,277 Other provisions, accrued expences 10,731 10,836 Tax accruals 5,284 8,001 Other current liabilities 9,957 17,964 Total current liabilities 48,894 90,698 Convertible bonds 1,179 1,846 Pension accruals 2,183 2,372 Total long-term liabilities 3,362 4,218 Total Liabilities 52,256 94,916 Share capital 36,436 36,873 Additional paid-in capital 15,197 26,572 Retained earnings 82,668 82,668 Profit current year 0 27,160 Currency translation adjustment 1,105 58 Total Shareholders Equity 135,406 173,331 Total Liabilities & Equity 187,662 268,247 5
Quarterly Report Replication Expo in Shanghai with a STREAMLINE DUPLEX in operation CONSOLIDATED STATEMENTS OF INCOME AS AT SEPTEMBER 30 (US GAAP, unaudited) 6 Third Quarter First 9 Months 2001 2002 2001 2002 KEUR KEUR KEUR KEUR Gross Revenues 71,288 99,181 175,796 209,471 Sales Deductions & Direct Distribution Costs 4,498 3,286 11,074 9,586 Net Revenues 66,790 95,895 164,722 199,885 Cost of Goods Sold 43,017 61,134 107,890 127,678 Gross Profit 23,773 34,761 56,832 72,208 Research and Development 1,733 3,666 4,405 9,345 Sales and Customer Service 2,791 4,156 8,780 11,813 General Management and Administration 1,628 2,350 4,865 6,328 Other Operating Expenses 928 2,658 3,075 3,700 Total Operating Expences 7,080 12,830 21,125 31,186 Operating Income (EBIT) 16,692 21,931 35,707 41,022 Interest Income and expenditure 411 517 1,256 1,293 Profit Before Tax 17,103 22,449 36,963 42,314 Income Taxes 6,580 7,910 14,213 15,141 Minority Interest 3 3 10 13 Net Income 10,521 14,535 22,740 27,160 Net Income per share (basic), EUR 0.29 0.39 0.63 0.74 Net Income per share (diluted), EUR 0.27 0.37 0.60 0.70 Weighted average shares outstanding (basic) 36,378,858 36,873,096 36,346,888 36,735,818 Weighted average shares outstanding (diluted) 38,510,957 38,961,883 38,083,987 38,713,304
Klaus Hammen, New Vice President Research, Marketing and Sales CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY AS AT SEPTEMBER 30 (US GAAP, unaudited) Share Additional Retained Currency Total capital paid-in- earnings & translation shareholders' capital current profit adjustment equity SPACELINE in the manufacturing area KEUR KEUR KEUR KEUR KEUR Balance at December 31, 2001 36,436 15,197 82,668 1,105 135,405 Capital increase 437 11,375 11,812 Currency translation adjustments -1,047-1,047 Profit current year 27,160 27,160 Balance at September 30, 2002 36,873 26,572 109,828 58 173,331 CONSOLIDATED CASH FLOW STATEMENT AS AT SEPTEMBER 30 (US GAAP, unaudited) First 9 Months, 2001 First 9 Months, 2002 KEUR KEUR Net Income 22,740 27,160 Depreciation 1,606 1,936 Change in Pension Accruals -21,848 189 Change in Working Capital 15,136-32,545 7 Net cash flows from operating activities 17,634-3,260 Cash Flow from investing activities -626-14,194 Movt. in Long Term Depts 569 667 Capital increase 227 11,812 Currency Translation 485-1,047 Net Change in Cash & Liquid Funds 18,289-6,022 Cash & Cash equivalents at beginning of period 41,389 47,431 Cash & Cash equivalents at end of period 59,678 41,409
Quarterly Report Company Calendar 2002/2003 11/04/02 Quarterly report 03/2002 03/28/03 Quarterly report 04/2002 and annual closing, press conference and DVFA-Meeting, Frankfurt/Main 05/05/03 Quarterly report 01/2003 05/26/03 Annual shareholders Meeting 08/04/03 Quarterly report 02/2003 11/04/03 Quarterly report 03/2003 Shares and subscription rights, 09/30/02: Shares à 1 Euro V V Roland Lacher GbR 81.000 pieces William Slee 29.520 pieces Thomas Geitner 1.500 pieces Stock subscription rights provided in form of convertible bonds á 1 Euro: V V Roland Lacher GbR 60.750 pieces Klaus Hammen 162.000 pieces Dr. Christian Holtmann 243.000 pieces Employees 2.008.728 pieces Additional Notes: Annotations in Accordance with Neuer Markt Regulations There were no changes made to balance or assessment methods. Cost and Price Devlopment Prices and costs developed according to plan. Expenditures Expenditures totalled in the first nine months 3.5 Mio. EUR. An increase in fixed assets was realized through the acquisition of SINGULUS OMP on January 01, 2002 and the consolidation in quarter 1-2002. The preliminary purchase price amounts to 22,689 KEUR. Half of the price was paid in cash, half with new shares from authorized capital. For this purpose, 379,100 shares were issued with excluded subscription right of shareholders. Division of Earnings SINGULUS operates exclusively in a single industry segment. Changes to Executive and Supervisory Boards Klaus Hammen (35) was appointed as Vice President Research, Marketing and Sales. Significant Events with the Potential to Impact Business Operations No significant events. Interim Dividends Dividends won t be disbursed. Disbursement or Suggested Disbursement Amount There was neither a dividend disbursed nor a suggestion for the disbursement of dividends. Change of Shareholders Equity (information please find in the table Consolidated Statement of Shareholders Equity ) SINGULUS TECHNOLOGIES AG Hanauer Landstraße 103 D-63796 Kahl Tel.: +49-6188-440-0 Fax: +49-6188-440-110 investor-relations@singulus.de www.singulus.de 9 months cumulative, as of 09/30 / 1999 / 2000 / 2001 / 2002 9M 1999 9M 2000 9M 2001 9M 2002 KEUR KEUR KEUR KEUR Gross Revenues 107,870 270,587 175,796 209,471 Operating Income (EBIT) 25,210 73,238 35,707 41,022 Profit Before Taxes 25,427 74,119 36,963 42,314 Net Income 12,802 38,680 22,740 27,160 Cash-Flow from Operating Activities 14,832 20,506 17,634-3,260 Staff 194 306 328 472 R&D Expenditures 2,805 4,136 4,405 9,345 Earning per Share (DVFA/SG) 0.36 1.07 0.63 0.74* * based on 36.873.096 issued shares à 1 EURO 04.11.2002 MetaCom