Annual Report 2001SINGULUS TECHNOLOGIES AG

The first optical disc of the world. About 1700–1600 B.C. theancient culture of Crete used clay discs to preserve and opticalycommunicate information by scratching hieroglyphic script intospiral patterns on both sides.

All figures in KEUR, except * (actual number)* * based on 36,436,440 shares at 1 EUR per value at Dec. 31, 2001

At a Glance

3

SINGULUS TECHNOLOGIES CONSOLIDATED

1998 1999 2000 2001

KEUR KEUR KEUR KEUR

Gross Revenues 101,259 177,258 375,722 225,525

Profit before Tax 24,094 45,493 94,724 42,448

Net Income 11,278 23,781 48,655 27,935

Total Shareholders’ Equity 30,909 56,541 106,484 135,406

Balance Sheet Total 62,128 129,197 199,332 187,662

DVFA-Cash-Flow 12,292 25,459 51,106 30,283

R & D Expenses 3,505 4,359 9,013 8,307

Employees* (Dec. 31) 157 212 319 367

DVFA/SG

Earnings per Share (EUR) 0.31 0.66 1.35 0,77**

Table of Contents

4

O At a Glance Page 3O Supervisory Board and Managing Board Page 5O Supervisory Board Report Page 6O Managing Board Report Page 8O Status Report on SINGULUS TECHNOLOGIES CONSOLIDATED Page 12

and SINGULUS TECHNOLOGIES AGMarkets and Products Page 14Research and Development Page 23SINGULUS TECHNOLOGIES Stock Page 26Revenues and Income Page 30Balance Sheet and Earnings Utilization Page 33Sales and Service Page 36Staff Page 37Capital Expenditures and Financing Page 38Corporate Control and Transparancy Act (Risk Report) Page 40

O Fiscal 2002 Forecast Page 42

O SINGULUS Machines Page 44O Fascinating Optical Storage Media Page 46O The Future Belongs to DVD Machines Page 48O Acquisition of EMOULD Page 52O Acquisition of OMP Page 54

O Year End for SINGULUS TECHNOLOGIES CONSOLIDATED Page 56as of 12/31/01

O Annual Report 2001 HGB as of 12/31/01 Page 91

O Glossary of Technical Terms Page 98

O Company Calendar Page 101

Supervisory Board and Managing Board

5

O Supervisory Board

Alexander von EngelhardtKronbergChairman

William SleeLondonVice Chairman

Thomas GeitnerCologne

O Managing Board

Roland LacherGelnhausenChief Executive Officer

Dr. Christian HoltmannKronberg

Reiner SeilerGelnhausen

During the past fiscal year, the Supervisory Board regularly advised and reviewedthe work of the Managing Board. Managing Board reports were received during jointboard sessions and discussed in detail. Detailed written information was provided ondecisions or measures to be taken by the Managing Board requiring a SupervisoryBoard vote as mandated by law, statutes or rules of order.

Appropriate documents were reviewed during our sessions and necessary resolu-tions were enacted. Resolutions were also executed in writing. In addition to theSupervisory Board sessions, the Managing Board regularly apprised us on the statusof the corporation. Additionally, an ongoing exchange of information outside of theSupervisory Board sessions was conducted by the Chairmen of the Managing andSupervisory Boards (14 meetings).

Six Supervisory Board sessions were held in fiscal 2001. The general economicsituation, corporate growth prospects and areas of operation along with investment,finance and manpower planning were among the topics addressed. In particular, we discussed the earnings-oriented growth and further internationalization of thecorporation as well as investment in additional companies. A review of the futuredirection taken by the corporation following the events of September 11 became anadditional strategic requirement.

The formation of committees was waived as the Supervisory Board is comprisedof just three members. All concerns were addressed in plenary sessions.

The consolidated financial statements were set up according to the U.S. GAAP, aswas the case last year. In accordance with § 292a Par. 1 und 2 HGB, we availed ourselves of the exemption from summarization of consolidated financial statementsas provided by German Commercial Code regulations. The consolidated financialstatements, consolidated status report on SINGULUS TECHNOLOGIES AG as well asthe requirements for exemption stated in § 292a HGB were reviewed by ARTHURANDERSEN Wirtschaftsprüfungsgesellschaft Steuerberatungsgesellschaft mbH,Eschborn/Frankfurt am Main, the certified public accounting firm appointed as auditor at the Annual Shareholders’ Meeting.

Following a resolution by the Supervisory Board, the order to audit the annualreport was issued to the aforementioned certified public accounting firm by thechairman of the Supervisory Board. As is internationally customary, the auditor’sreport referred to both the responsibilities of the Supervisory Board and auditoremphasizing audit standards and central issues. As determined by the auditor, the

Supervisory Board Report

6

7

accounting methods of the U.S. GAAP were completely adhered to. The SINGULUSTECHNOLOGIES AG Annual Report received an unreserved audit certificate inaccordance with § 322 HGB.

Within the scope of his audit and in accordance with § 317 Abs. 4 HGB, the auditoralso examined the monitoring system of SINGULUS TECHNOLOGIES Consolidated asproscribed in § 9 Abs. 2 AktG. As a result of his audit, his auditor’s report confirmsthat the monitoring system established by the Supervisory Board is appropriatelyequipped with regard to the risk environment and satisfies its requirements.

The annual reports, status reports and auditor’s report were all submitted in atimely manner. The auditor participated in the Supervisor Boards’ financial sessionand reported extensively on the findings of his report. Assisted by the auditor,closing documents were discussed in great detail. We concur with the results of the audit as submitted by the auditor.

The audit of the annual closing of the AG was initiated by the Supervisory Boardand a final report was issued. The final report includes the status report, consolidat-ed closing with the consolidated status report and the recommendation for earningsutilization. No objections were raised. As a result the Supervisory Board Chairmanapproved the 12/31/01 Annual Report and Annual Financial Statements presentedby the Managing Board. We concur with the Managing Board’s recommendation forthe utilization of retained earnings.

We extend our thanks to the Managing Board, executives and employees of the consolidated SINGULUS companies for their contributions, commitment andconstructive cooperation.

Kahl/Main, March 18, 2002

The Supervisory Board

Alexander von Engelhardt

Chairman

Dear Shareholders,

In economic, financial, and geopolitical terms, 2001 was characterized by increas-ingly dismal news. The decade-long period of growth in the US economy came to aclose, the boom in the “new economy” that began in the year 2000 underwent arapid reversal, and the challenges of international terrorism took on an entirely newdimension.

Within this framework, the market for our specialized optical media replicationmachines also suffered a harsh setback. Following years of continuous growth, theyear 2001 became engulfed in a period of consolidation. The fallout included theinsolvency of two competitors.

Within this environment, SINGULUS TECHNOLOGIES not only maintained butexpanded its position as the preeminent supplier of optical disc replicationmachinery.

Still, the corporation’s consolidated revenues fell to 225.5 million Euro, down 40 percent from the prior year. Following the exceptional year 2000, this drasticslump distorts the year as a point of reference. Spurred by market conditions, therecord year 2000 became a runaway success. In retrospect, many technology-drivenmarkets including our own were caught up in an unhealthy state of euphoria in the year 2000.

This trend was accomodated by an expansion of our fixed capacities only as tiedto long-term growth projections. The employment of temporary personnel helped to defray the peaks in our production growth. This approach averted the underutili-zation of capacity and its attendant difficulties. Thus the year 2001 became one ofnormalization and consolidation. By comparison, 2001 revenues were still conside-rably higher than the 177.3 million Euro posted in 1999.

Despite the difficult conditions presented by extreme volatility in demand, thecompany’s streamlined financial infrastructure enabled us to post annual earningsof 27.9 million Euro with a net return of 13.1 percent. Our company’s high earningscapacity was maintained throughout this period of consolidation.

Managing Board Report

Dr. Christian Holtmann Roland Lacher Reiner Seiler

8

Despite the downturn in revenues, progress was made in 2001 towards accom-plishing some of the strategic steps necessary to ensure the long-term success ofthe company. Innovations and strategic acquisitions enabled us to significantlyexpand our product portfolio and considerably increase the organization’s earningscapabilities.

We have long pursued a strategy of maintaining a leading technological presencein all three major applications for CD and DVD replication systems. These core applications are:

● prerecorded● recordable● rewritable

CDs and DVDs. The principal feature that distinguishes the DVD from the CD is itsexponentially greater storage capacity (see also “What is CD-ROM and DVD?” in thetechnology section of this report).

An important milestone towards the planned expansion and completion of ourproduct portfolio was achieved with last year’s launch of our MODULUS andSUNLINE machines for all rewritable technologies.

Not only were new markets penetrated with these new machines; our value-added supply chain was extended as well. It is still our goal to expand this supplychain by adding elements with strong margins and of strategic importance. Mostcustomers prefer comprehensive replication line vendors. Comprehensive solutionslack the vulnerabilities inherent in technical interfaces. All the customer needs isone partner with single-source fulfillment capabilities – the technological concept,hardware, training and service.

The acquisitions made on 10/1/01 and 1/1/02 have allowed us to complete theexpansion of our value-added supply chain. EMOULD GmbH in Wuerselen nearAachen augments our CD and DVD replication with moulding machines for theproduction of carrier media (polycarbonate discs). The acquisition of the Dutchcompany Optical Measuring-Equipment and Projects BV (OMP) headquartered inBest near Eindhoven, will enhance our business by adding the mastering process,

9

Managing Board Report

10

the first step in the replication of discs. We have now become independent in bothtechnologically sensitive areas and have gained another opportunity to extend ourtechnological lead. Both acquisitions were made under very reasonable conditionssince a good portion of the companies’ value is brought about by their assimilationinto SINGULUS TECHNOLOGIES’ strategic trade channels.

The outcome of our strategic innovations and acquisitions: Globally present,SINGULUS TECHNOLOGIES is now by far the preeminent comprehensive supplier of all optical disc replication technologies and systems. We are also the only supplier in this market with enough critical mass in terms of market share to provide consistently strong earnings.

In times of consolidation – attaque! We have fully developed and secured ourposition in the market. From this position we will be able to gain additional marketshare and profit more than any competitor from a renewed growth in the market.The time has come to venture into a new market related to our core business.

The Managing Board

11

Status Report 2001

12

Table of Contents

Markets and Products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 14

Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 23

SINGULUS TECHNOLOGIES Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 26

Revenues and Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 30

Balance Sheet and Earnings Utilization . . . . . . . . . . . . . . . . . . . . . . . . Page 33

Sales and Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 36

Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 37

Capital Expenditures and Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 38

Corporate Control and Transparancy Act (Risk Report) . . . . . . . . . . . . Page 40

Fiscal 2002 Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 42

S t a t u s R e

New replication line SUNLINE withintegrated metallizer MODULUS for theproduction of: CD, DVD-RW, DVD+RWand DVD RAM

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SUNLINE

p o r t 2 0 0 1

14

O Optical Data Storage Media: Waves of Growth Markets

Optical data storage media, primarily CDs and DVDs of all kinds – are based on avery simple technical principle. Minute marks are applied to a bright, reflective back-ground. The ensuing transition from light to dark is nothing more than a visualizationof the binary computer codes 0 and 1. These light-dark sequences are “read” whenexposed to a laser beam. The variations in the reflective values are then decipheredby a detector and the “spots” are coverted into digital data.

O The First Music CD was Produced Nearly Twenty Years Ago and Took the World by Storm

Today, an increase in its market penetration is unlikely. The market for CDs andconsequently for CD machines has become a mature and cyclical mass market.

New products and quantum leaps in technology have created successor formatsto the first optical media market:● The CD for computer applications (CD-ROM)● The CD for video (VCD – customary only in Asia)● The once-recordable CD (CD-R)● The re-writable CD (CD-RW)● The DVD with its exponentially greater capacity in the same three prerecorded,

recordable and rewritable variations, as well as● the latest DVR generation able to extend capacity limits to near unimaginable

dimensions through new read and compression processes (still in the develop-mental stages)

In part, formats such as DVD cannibalize the CD market, and in part, create paral-lel markets to supplant other sources of data storage media (magnetic data storage,semiconductors).

All new optical data storage media constitute growth markets with great and attimes growing vitality. At present, there is no end in sight to these developments.

O DVD in the Midst of a Breakthrough

The “Digital Versatile Disc” – DVD – will win the hearts of people the world over.It is the logical successor of the “compact disc” (CD). While the CD once representedradical progress for data storage in terms of cost effectiveness and minimal con-sumption of space, its limits are now being approached for many applications.

Status Report 2001

Markets and Products

15

Booming DVD Market in Germany

Digitized, moving images, i.e., films, music videos or computer games, require morestorage capacity than the approximate 650 MB a conventional CD has to offer.

DVD’s victories are reminiscent of the inroads made by the CD a decade ago. Allmajor Hollywood studios have recognized the technical superiority of the (digital)DVD over the (analog) VHS system and are accelerating the rate at which theyutilize this format to market their films around the world.

O Digital Video and Audio Carriers Gaining Ground

Developments in the German video sector, for example, exhibited very dynamicgrowth in 2001. The DVD increased about 139 % a total of 406.7 Mio. Euro. Overallsales of digital video and audio media in Germany have now surpassed those ofanalog products (i.e., VHS).

Its use as a audio medium, particularly in game consoles manufactured by SONYand MICROSOFT (Playstation 2 launched in 2000, X-Box in 2001) has also bolsteredthe growth of this format.

Market analysts expect the number of DVDs manufactured in 2002 to exceed the1 billion mark amid sustained dynamic growth in the market.

The sale of DVD players is a reliable indicator of future DVD sales: As marketgrowth around the world migrates “away from the sun”, the number of players soldin 2002 will exceed conventional video recorder sales for the first time. DVD playersare present in approximately 25 % of U.S. households; in Europe the figure is esti-mated not to exceed 10 %. DVD is not yet widespread in Asia where use of a unique,

■ Number of Videos Sold

■ Number of DVDs Sold

Source: SPIO Filmstatistisches Taschenbuch 2000Estimates: Screen Digest

1998

1999

2000

2001

2002e

2003e

Mio. Discs 80 70 60 50 40 30 20 10 0

16

Current DVD-Player Penetration

Status Report 2001

X-Box Game ConsoleMade by MICROSOFT

Markets and Products

CD-based video format not commonly used elsewhere has become prevalent.Greater demand, better quality and falling prices, especially for DVD players, willultimately win over the Asian market for DVD technology. With it, an entertainmentmarket will be accessed which, for the mid-term, is the largest in the world.

By comparison, conventional video cassette recorders have become fixtures inapproximately 90% of all U.S. and European househoulds. Based on the premise thatDVD will ultimately displace the VHS cassette, these regions represent phenomenalgrowth opportunities for DVD in the years ahead.

O “Rewritable” DVD Still Lacks Global Standard

A uniform global standard has been approved for the prerecorded DVD and once-recordable DVD-R formats. This is not the case for DVD recorders, i.e., the devicesthat record rewritable DVDs. DVD+RW (PHILIPS), DVD-RW (PIONEER), and DVD-RAM(HITACHI, TOSHIBA AND PANASONIC) are all competing for dominance in this format.This segment of “rewritables” is threatened by a fruitless technological coexistencereminiscent of earlier struggles between the VHS, Betamax and Video 2000 videostandards.

Market penetration rates are largely dependent on the development of hardwareprices, i.e., players and recorders. The three variants have to some degree slowed themarket penetration of rewritable DVD due to a reduction in the “economies of scale”.

Nevertheless, projections are for 60 % overall growth in the optical media marketover the next five years.

Europe

USA

<10,0%

<25,0%Source: DVD PrimerEstimates: CSFB

>90% VHS-Players Penetration

% 40 35 30 25 20 15 10 5 0

17

O Asia Takes a Different Course

At present, Asian markets are most familiar with the digital video CD and to alesser extent with the analog VHS cassette. When compared to Video CD, consumeruse of DVD comes in second to the VHS cassette. As a result, the acceptance of DVDlags behind the other two triad markets and overall expectations in general. It shouldtake another year or two before the DVD spark ignites the interest of consumers inthe Far East. Most market observers do not question that it will catch fire: the format’sconquest of western markets along with its superior capacity at very competitiveprices will eventually fuel the Asian market as well.

O An Important Question:

The direction taken by the game console market will become an increasinglyimportant question in the future. These products have now become so technologi-cally advanced that they rival the computing power of PCs. Integrated, some canalready double as DVD video players and a number of internet interface applicationshave also become available. In any event, optical media, i.e., DVDs, will be the pre-dominant source of data for these consoles.

O Dampened Effects Following an Exceptional Year

With 79 systems sold in fiscal 2001, our SPACELINE DVD replication line remainsan industry best-seller. Sales recorded by our closest competitor were less than halfthat number. However, the record achieved by the sale of 99 machines the yearbefore could not be duplicated.

Due to a global reduction in capacity for CD lines, the 211 systems sold in 2001fell far short of the number sold during the exceptional prior year (405 lines). Adecline in the sale of music CDs is not the most insignificant reason for this down-turn. The practice of downloading music from the internet and storing it onto harddrives is more prevalent than ever among young people. This, and copying musicCDs had a negative effect on our European and U.S. business first felt in 2001. Nowwe are in a position to profit from the home recording trend: the CD-Rs, e.g., DVD-Rsneeded for this purpose are also produced on SINGULUS machines.

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Sold Machines in 2001

Furthermore, the worldwide disenchantment with the “New Economy” and theadvertising budget cuts that followed led to an decline in the number of CD-ROMsproduced. Cyclical and even initial structural reasons may have been contributingfactors; the classic CD may have passed its prime in terms of the product’s life cycle.Instead, new and more efficient products such as DVD are approaching an acceleratedphase of ascendance.

Comparisons with the preceding year are of only limited significance. First, theannual production in 2000 benefited from the delivery of a major order. Second, aretrospective view of the year 2000 reveals it to be an exceptional year with abnor-mally positive developments. When this format is considered over a period of severalyears, it reveals an intact growth trend.

O CD-R Market Wanes in Asia

The CD-R markets, particularly in Asia, recovered slightly at the start of 2001 asmarket demand and production capacities regained a new equilibrium. However,sales of new systems flagged once again during the second half of the year. At 29,the number of our STREAMLINE CD-R lines sold remained at prior year levels.

The once-recordable CD-R enjoys tremendous worldwide popularity and steadysales. Market developments are characterized by intense price wars among CD-Rmanufacturers which leads to an inevitable erosion in pricing for new lines. InDecember 2001, the European Union imposed import tariffs on major Taiwanesereplicators in an effort to protect the European market against price dumping.SINGULUS gained additional European orders as a result.

Status Report 2001

SONY Playstation 2 –Game Console

Markets and Products

EMOULD InjectionMoulding Machines*

MODULUS

SPACELINE

SKYLINE

STREAMLINE

Metallizer

63

1

79

211

29

35

* (Total number consolidated at 10.01. 2001 for 2001)

19

O DVD-RW will Emerge as a Significant Growth Market

The advent of phase-change technology has made the inability of optical mediato replace recorded content, whether pre-recorded or “burned”, a thing of the past.New CD and DVD formats employing this technology can be repeatedly erased andre-recorded.

These formats thereby enter into direct competition with music and video cas-settes. The launch of DVD±RW and DVD-RAM will create a completely new formatwith technology that is very well-suited for home video recording. The format canalso be manufactured economically and should soon emerge as a consumer staple.

The technological requirements for the manufacture of this new CD-RW,DVD±RWand DVD-RAM media are extraordinarly demanding (see the product segment in this report). An explanation of the recording process is comparatively simple: Thecoating applied to a rewritable disc consists of a special metal alloy. By exposingthis layer to a laser beam, a localized area is superheated and transformed from anamorphous into a crystalline state. Since this process is reversible, the digital infor-mation on a disc can be altered or replaced at will.

At one time, it was a major technical challenge to develop affordable recordersand discs for this technology. Rewritable discs are not coated with the single reflec-tive layer used for pre-recorded and once-recordable formats. Instead, they consistof a complex package with at least four separate layers. Consequently, the metallizeremployed (see product section in this report) can no longer be equipped with a singlecathode but must feature multiple cathodes and process chambers. The MODULUSmetallizer fulfills all current requirements for rewritable CD and DVD disc replication.

The systems and process technology developed for this purpose delivers technicallyfirst-rate products at the lowest manufacturing costs. Through intense research andrapid development we have become the first global producer of comprehensive sys-tems and their requisite processes. Our expectations for future growth are based onthe high interest this innovation has generated in the Asian and European markets.

20

The rate of DVD±RW market penetration is still somewhat suppressed: while aworldwide standard has been adopted for CD-R, three different formats are vyingfor the DVD rewritable sector. Unfortunately, this situation has caused potentialbuyers to exercise a certain amount restraint that has ultimately led to delays in themarket penetration of DVD recorders. We have resolved this dilemma by manufac-turing a machine to serve all of these formats.

O SINGULUS: First Supplier of Interface-free Comprehensive Solutions

The strategic acquisitions of OMP for mastering and EMOULD for moulding, re-spectively, have increased the effectiveness of our overall know-how, acceleratedour product development and streamlined our financial infrastructure. Furthermore,the customers of both acquired companies welcome the advantages a comprehen-sive supplier of interface-free systems is able to provide. Conversely, both manufac-turers profit from their integration into the SINGULUS sales and service networkthrough which they are afforded new growth prospects. The first market success ofthe strategy “all from a single source” has already been realized. The first two com-prehensive systems in this complete configuration were sold during the last quarterof 2001.

O Foreign Markets: Asia Leads, Growth in China Above Average

In the past, Asia emerged as one of SINGULUS TECHNOLOGIES’ most importantexport markets with the region accounting for more than half our total revenues.

In 2001, the former growth capitals of Hong Kong and Taiwan suffered a down-turn in the demand for all CD, CD-R and especially DVD replication machinery. ThePeoples’ Republic of China, however, emerged as a new growth market and continuedto expand its capacity. Evenso, this growth was unable to fully offset the downturnin Hong Kong and Taiwan. The first SPACELINE DVD replication line was successfullyinstalled in Japan, home to one of our principal competitors.

Status Report 2001

Markets and Products

21

O USA: DVD-ROM Gaming Explodes:

High demand for DVD systems characterized the activity in the U.S. market. TheUnited States is the largest market for video games and game consoles, generating$9.4 billion in sales for these products last year. Never before had sales in this sectorsurpassed U.S. movie theater box office revenues, which totaled only 8.4 millionDollars.

New game consoles launched by SONY (Playstation 2 in 2000), Nintendo andespecially MICROSOFT (GameCube and X-Box respectively, both launched in 2001)were the driving force behind this success. The X-Box is not scheduled for release inthe European and Asian markets until 2002.

The market research firm NPD Group reports that 2001 sales of consoles and videogames more than doubled in the US. The billions invested in these new markets willsoon generate significant demand for new DVD-ROM products and contribute tostrong growth in the prerecorded DVD market.

The sale of Hollywood films fueled DVD growth which peaked during the 2001Christmas season. In the wake of SONY’s Playstation 2 launch in 2000, MICROSOFTbegan delivering its rival X-Box, (developed exclusively for DVD-ROM use), inNovember 2001. Within just 2 months, 1.5 million X-Boxes had found their way intothe hands of buyers. DVD-ROM sales are expected to generate multiples of this figure.The X-Box will make its debut in Europe and Asia in the Spring of 2002.

So-called “Mould” in aEMOULD InjectionMoulding Machine

Production Steps for CD and DVD

Mastering Moulding Curing InspectionMetallizing

CD: Lacquering

DVD: Bonding

CD-R: Dye Coating

Replication Line

Proprietary Technologies of Metallization, Lacquering, Bonding and Dye Coating will

Secure Technology Leadership

Status Report 2001

Optical Measuring Unitin a SINGULUS Metallizer

22

Markets and Products

128 Game Bit Console Sales: Worldwide

■ Playstation 2

■ XBOX

■ Game Cube

Source: Understanding& Solutions, Microsoft

1999

2000

2001

2002e

2003e

2004e

% 16 14 12 10 8 6 4 2 0

Overall, the continued development of computer game technology signifies afundamental boost for DVD production and will directly affect the sale of replicationlines. Investments in CD lines remained relatively stagnant due to the general down-turn in this market.

O Europe Banks on Blank Media

European investments demonstrated remarkable resilience in 2001. DVD has alsofound wide acceptance here, particularly in France and England. Unlike America, ourEuropean customer base consists primarily of smaller and mid-sized companies.

European customers are also beginning to invest in rewritable CD and DVD repli-cation lines. We believe that Europe will become a large consumer of these newblank media in the future. The strong role played by PHILIPS in this area supportsour general marketing efforts as well as the transfer of technology to our companyand those of our customers.

23

Research and Development

Status Report 2001

SINGULUS V – Metallizer

O SINGULUS Accelerates the Number of Roll-Outs

The optical disc market places great demands on R&D. New applications andformats are constantly being developed, which in turn necessitates the developmentof new production processes and system technologies.

Founded upon the metallizer (machine which applies metal to disc surfaces), ourproduction program has grown steadily over the years and now includes comprehen-sive systems for every variation of optical disc. We can now offer our customers aseamless product portfolio superior to that of any other vendor in the industry.

O Research Paramount

Our objective is to defend our leading position through relentless innovation. Asthe life cycle of a product in our industry spans only 3–4 years, each sector in ourproduction program must be renewed regularly. Therefore, our primary business ob-jective is to sustain our innovative strength, creativity and rapid rate of development.

Not long ago, we found the development and marketing of one new productevery year to be sufficient. We have since stepped up the pressure to innovate byraising this number to two new products per year. Only in this manner can we layclaim to our own technological leadership demands.

The development of the SINGULUS V metallizer was completed in fiscal 2001. Itfeatures totally re-engineered solutions for essential components such as electricdrives, power supplies and measuring technology. Improvements were made toprocess technology affecting the stability and cycle times of all sputtered materialsused in the market such as aluminum, silver, silicon and gold.

O 3D-Based Engineering

New computer technology featuring three-dimensional graphics was first employedin the mechanical design of the SINGULUS V metallizer. This important pilot projectprovided us with practical experience as this new engineering method was imple-mented. Graphics across the entire range of our machinery will soon be converted tothe more effective 3-D technology.

Ongoing improvements were made to individual components in the SPACELINEwith an emphasis placed on reducing cycle times, improving machine uptime andproduct quality.

Research and Development

Daily Production Capacity for DVD with SPACELINE

Atomic Force Microscope

24

Status Report 2001

O Overall Process Stability and Machine Uptime for CD and DVD Replication are Now Comparable

Our machines already achieve daily yields of 18,000 DVDs and up. The constantdemand by customers for further cost reductions will accelerate our optimizationefforts. The achievement of daily yields numbering 20,000 DVDs is expected in theforeseeable future.

It has long been apparent that moulding technology for CD discs is pivotal to theimproved productivity of an entire system. The quality of the DVD substrate in largepart determines the quality and ultimately the total number of acceptable DVDsproduced at the end of the entire replication process.

New methods of statistical quality assurance have been implemented that enableus to evaluate the stability of individual process steps. This research resulted in arecognition of a marked superiority in the process stability of fully-electric (i.e.EMOULD machines) over hydraulically-controlled injection moulding machines.

O Production Speed Rises, Reject Quota Drops

A series of technical improvements has increased the replication speed of the CD-RSTREAMLINE by an additional 10 %. Process development for DVD-R followed; apatent application has been filed for the new method of cooling the 0.6 mm DVDsubstrate halves. The “bonding” of the DVD (joining of the two polycarbonate discscomprising a DVD) is performed on the proven SKYLINE Duplex.

Future DVD-R research efforts will most likely center on a reduction in processcycle times, significant increase in output, as well as the ultimate reduction in thecost per DVD-R.

1999

2001

2002

8,500

18,000

20,000

20,000 15,000 10,000 5,000

25

Design-Study for SUNLINE with MODULUS

O Pioneering Achievement: First Comprehensive System for Rewritable DVD Formats Launched in 2001

Last year’s research efforts were dedicated in large part to the presentation of a mature and complete SUNLINE inline replication system. In concert with the MODULUS metallizer, it can replicate all rewritable CD-RW, DVD-RW, DVD+RW and DVD-RAM formats.

In 1997, SINGULUS TECHNOLOGIES first introduced its inline replication techno-logy for prerecorded DVD and is once again pioneering seminal process and systemstechnologies. The objectives fundamental to our product development have notchanged: short cycle times, optimized sputter technology (coating technology), maximum machine utilization and high output, all within a single process chain.

O Strategic Development Alliances

The technological barriers to the successful replication of rewritable CDs andDVDs are extremely high. For this reason we have entered a development coopera-tion with PIONEER and PHILIPS which will assure a more comprehensive and rapidtechnology transfer for all new products. In the final analysis, “time to market”determines who will maintain the edge in the competition for customers and markets.

26

O Moderate Drop in SINGULUS Stock in 2001

SINGULUS TECHNOLOGIES stock prevailed amid the difficult financial environmentin 2001. It continues to rank among the most well-known values on the Neuer Marktand enjoys the continued attention of analysts.

2001 was a very difficult year on the stock market, characterized by significantdownturns for a majority of German companies. Demand in the financial worldconcentrated on DAX shares well into the summer, while stocks on the Neuer Marktsegment suffered a strong decline in prices. Not until the effects of the terroristattacks in the USA in September subsided did the more solid companies on theNeuer Markt regain the attention of investors.

Even SINGULUS shares were not left unscathed by the negative trend in themarkets. The stock dipped to a low of approx. 15 Euro in mid-January, mid-April and mid-September, but quickly rebounded in all three instances. Following a 91 %growth in value in 1999 and 18 % in 2000, the stock forfeited 12.5 % of its value in 2001.

O Significantly Better Performance than the Overall Market

SINGULUS stock showed resilience despite the negative mood in the stock market,retaining its high valuation compared to the performance stock indices. Comparedto the Nemax 50 Index, which dropped 55 % to 1150 points in 2001, SINGULUSshares performed remarkably well. Even measured against the course of the NemaxAll Share Index (likewise down 60 %), SINGULUS stock demonstrated an ability towithstand the notable downward slide of the Neuer Markt. In the first two months

SINGULUS TECHNOLOGIES Stock

Status Report 2001

SINGULUS TECHNOLOGIES Stock in Comparison

– SINGULUS Stock

– Nemax 50

– Nemax All-Share

01.01.01 Feb. Apr. Jun. Aug. Okt. Dez. Feb. 27.02.02EUR

35

25

15

27

of this year, SINGULUS shares performed better than the Nemax 50 Index, disen-gaging from the restrained climate on the stock exchange.

SINGULUS stock is actively traded all German stock markets on a daily basis andelectronically on the Xetra. With a trading volume of approximately 152,500 sharesin Xetra and 66,200 on the floor of the exchange, SINGULUS stock ranks among themost actively traded securities on the Neuer Markt. With a free float of over 90 %,it is one of the most liquid assets actively sought by major funds.

The 12/24/01 admission of SINGULUS stock into the worldwide Dow JonesSTOXXSM 600 Index underscores the increasing significance of the stock. We arepleased by this decision and expect that it will lead to greater international consideration.

Market capitalization at the end of the period in report totalled 1.148 millionEuro. The price-to-earnings ratio for fiscal 2001 is now calculated at a factor of 41.Earnings per share in accordance with DVFA/SG totalled 0.66 Euro per share in1999, 1.35 Euro per share in 2000 and 0.77 Euro for fiscal 2001. It should be noted,however, that the number of shares rose from 115,128 to 36,436,400 during thecourse of the year.

Stock Key Figures

Stock exchange: FrankfurtISIN: DE0007238909Master data: 723890Stock symbol: SNG / Reuters SNGG.DE / Bloomberg SNG.NMType of shares: Ordinary bearer shares for 1 EURIssued share capital: 36,436,440Nomical capital: EUR 36,436,440Indices: NEMAX 50, NEMAX-All-Share,

Dow Jones STOXX SM 600NEMAX-Segment indices: TechnologyCDAX-Segment indices: CDAX - TechnologyFreefloat, approx.: > 90 %Shares per 31.12.2001: 36,436,440Market Cap per 31.12.2001: 1.148 Mrd. EURAnnual low 2001: 14.83 EURAnnual high 2001: 35.70 EURTrade volumina, Ø Xetra: 152,500 piecesTrade volumina, Ø Parkett: 66,200 piecesEarnings per share DVFA/SG in EUR: 0.77

Status Report 2001

28

O Our Investor Relations are Characterized by Very Active Dialogue

We actively participate in a variety of activities in order to fully satisfy the exten-sive information needs of current and future investors. These activities include par-ticipation in technology conferences and road shows as well as numerous individualdiscussions, press conferences and analyst events.

Moreover, our investor relations internet offerings on the SINGULUS website areregularly enhanced. By researching various financial magazines, our website nowranks as one of the most informative on the Neuer Markt. Furthermore, SINGULUShas actively participated in discussions concerning the restructure of the Neuer Marktand has demanded more stringent regulations. On behalf of our investors, we willcontinue our efforts to achieve a strong and credible reputation for this segment ofthe stock exchange.

O Fair Incentives for Executives

The enlistment, motivation and retention of qualified management is an increas-ingly important factor in the success of our company. To this end, it is necessary toprovide executives additional success-based financial incentives. The disbursementof convertible bonds presents the executive team with the opportunity to take partin the corporation’s success as reflected in the rising stock prices.

Approval was given at the Annual Shareholders’ Meeting in May 2001, for thedisbursement of 1.8 million bearer shares valued at 1 Euro to be distributed over aperiod of at least three years. The conversion rate is fixed at 1.3 times a predeter-mined average weekly rate. Thus it contains a clear performance-based component.Only if the corporate value as relected in the stock market rises more than 30 percentfrom the time the loan is signed to the time the convertible bond is exercised, doesa value increase for participating managers take effect.

The distribution of convertible bonds provides consistent and long-term motivationto Board members and other executives to advance the increased valuation of thecorporation.

SINGULUS TECHNOLOGIES Stock

29

O Sustained Analyst Coverage

The stability of the stock, permanent dialog with investors and analysts and thehigh level of recognition imparted by admission into the Dow Jones STOXXSM 600 is also reflected in the number of analyst reports issued.

The number of financial institutions providing SINGULUS coverage has steadilygrown in 2001. We are now reviewed by 33 different analyst firms whose evaluationsare predominantly positive.

In a concensus by financial anlysts, expectations for sustained growth in thecompany’s valuation are positive and subsequently reflected in the stock potential.The following financial institutions have issued extensive research reports on SINGULUS:

ABN Amro Bank AGB. Metzler Seel. Sohn & Co.Bank Vontobel AGBankhaus Julius Bär AGBankhaus Hermann LampeBayerische LandesbankBerenberg BankBerliner BankgesellschaftBHF BankBNP ParibasCommerzbank AGCAI CheuvreuxCSFB Credit Suisse First BostonDelbrück & Co. PrivatbankiersDeutsche Bank AGDZ BANKDresdner Kleinwort Wasserstein

Fortis BankFBR FriedmannBillings and RamseyHSBC Trinkaus & Burkhardt KGLandesbank Baden-Württemberg LB BWMerck Finck & Co.Merrill LynchMorgan StanleySal. OppenheimSBC Warburg Dillon ReadSG SecuritiesSES Research GmbHUBS WarburgValue Management & Research AGVereins- und Westbank AGWest LB Panmure

30 Revenues in Mio. EUR

Salessplit by Product Group

Following the exceptional year 2000 during which SINGULUS TECHNOLOGIES firstattained its leadership position in the systems market, our declared objective becamethe 2001 expansion of this preeminent position. Assuring our high level of profita-bility with a streamlined cost structure become another goal.

SINGULUS was unable to replicate the extraordinary results achieved in the year2000, posting total earnings of 225,5 million Euro (prior year 375.7 million Euro) forthe year in report. With consolidated revenues of 6.3 million Euro, EMOULD GmbHwas included in the corporate earnings for the first time effective 10/1/01.

O From Component Supplier to Full-Service Vendor

The evolution from component supplier to full-service vendor is also reflected inthe product configuration and distribution of sales by individual machine type. The

Status Report 2001

Revenues and Income

1997

1998

1999

2000

2001

89.3

101.2

177.3

375.7

225.5

■ SPACELINE

■ METALLIZER

■ Others

■ STREAMLINE

■ SKYLINE

■■ Moulding

1997

1998

1999

2000

2001

100 90 80 70 60 50 40 30 20 10 0 %

10 33 48 2.5 6.5

13 17 55 7 8

20 64 8 8

60 31 9

2.8 9.5 37.3 37.8 2.6 10

MODULUS Installation at PIONEER

31

Sales per Region

■ Asia

■ America

■ Rest of Europe

■ Germany

100 90 80 70 60 50 40 30 20 10 0 %

share of the former core CD machine business declined from 48 % in 2000 to 37.8 % in 2001.

Conversely, the earnings share for DVD machines rose from 33 % in 2000 to 37.3 % in 2001. The share in the CD-R/DVD-R machine segment fell slightly from 10 % to 9.5 %. The metallizer business garnered a 2.6 % share in 2001 (previousyear 2.5 %) while service totalled 10 % (prior year 6.5 %).

O Optical Media Manufacturers Shift Production Closer to Customer Base

The regional distribution in earnings for 2001 is reflected as follows: Germany 7 %(prior year 8 %), remainder of Europe 26 % (19 % last year), North and South America23 % (21 % in 2000) and Asia 44 % (52 % a year ago). Asia is still our largest marketalthough an ongoing shift in our customers’ production capacity towards the largestconsumer markets in the USA and Europe has become apparent.

O Sustained High Structural Earnings Capacity

SINGULUS TECHNOLOGIES achieved a gross margin of 34.8 % (prior year 37.7 %).This figure is remarkably high in light of heightened competition and the associateddecline in selling price.

A shift in the product mix in favor of higher-margin DVD machines was the prin-cipal reason for this success. Reduced material costs per system continued to offsetthe 2001 erosion in prices. Improved material expenditures were achieved by a morecost-effective system design, the continued commitment to modular engineeringwith many interchangable parts and specific readjustments of purchase terms.

Earnings (EBIT) totalled 40.2 million Euro (prior year 93.4 million Euro). Despite asubstantial drop in the volume of business from the year before, a strong 18.9 %return on earnings (prior year 27 %) was achieved. The continued impressive returnon investment is the result of our streamlined business model which is characterizedby low fixed costs.

2000

2001

52 21 19 8

44 23 26 7

32

Financial results totaled 2.2 million Euro (prior year 1.3 million Euro). Earningsbefore tax totalled 42.5 million Euro (94.7 millon Euro last year), leading to a pre-taxreturn of 19.9 % (previous year 27.4 %).

O Tax Reform Allows Tax Burden to Drop to Enterprise Levels

The tax rate for the year in report corresponds to 34.2 % (prior year 48.6 %). SINGULUS generated annual earnings of 27.9 million Euro (prior year 48.7 millionEuro). Net after-tax earnings of 13.1 % remain in the double-digits (14.1 % lastyear). This result corresponds to expectations expressed by SINGULUS TECHNOLOGIESthroughout the year.

O Order Backlog and Bookings

SINGULUS TECHNOLOGIES began the new fiscal year with an order backlog of55.7 million Euro. A residual order for DVD lines with an indefinitely deferred delivery is no longer included in these figures. The order intake in 2001 was 207.4 million Euro.

Financial Results 1997 – 2001 in Mio. EUR

Status Report 2001

Revenues and Income

■ Profit BeforeTax

■ Net Income

1997

1998

1999

2000

2001

100 90 80 70 60 50 40 30 20 10 0

48.794.7

27.942.5

23.845.5

11.324.1

10.223.3

Liabilities and Equity in Mio. EURAssets in Mio. EUR

Status Report 2001

33

Balance Sheet and Earnings Utilization

3.4

135.4

2.3

106.4

SINGULUS TECHNOLOGIES’ steadily growing market share in the optical disc sys-tems market and the associated company profitability were once again reflected inthe solid structure of its assets and capital in 2001. The balance sheet total at the12/31/01 closing declined to 187.7 million Euro from the prior year 199.3 millionEuro. The development is the result of specific adjustments made for the diminishedvolume of business as compared to the year 2000.

O Streamlining Evident in Balance Sheet

Fixed assets rose from 9.2 million Euro to 13.0 million Euro. Additional assetspredominantly affected purchases of systems and plant equipment necessitated by normal business operations. Write-offs totalled 2.1 million Euro (prior year 1.9 million Euro). By the closing date, fixed assets totalled only 6.9 % of total assets(prior year 4.6 %) which can be attributed to the lean infrastructure of the business.

O Improved Liquidity Despite Company Acquisitions

Working assets fell from 186.3 million Euro last year to 169.6 million Euro byclosing. This decline is essentially based on the clear reduction in inventory from83.1 million Euro last year to 56.7 million Euro at closing. Receivables of 61.2 millionEuro surpassed those of last year (57.7 million Euro). Without assuming additional

2001 2000

■ Cash

■ Total accountsreceivable

■ Total propertiesasstes

■ Total inventories

■ Others

■ Total current liabilities

■ Total current liabilities

■ Total shareholders equity

187.7 199.3 Total assets

48.990.6

61.7

9.2

83.1

41.4

65.5

13.0

56.7

47.4

2001 2000

3.95.0

187.7 199.3 Total liabilities and equity

34

Status Report 2001

Balance Sheet and Earnings Utilization

risk, SINGULUS deliberatey included its financial strength as a sales tool when cre-ating customer payment terms. Liquid assets rose from 41.4 million Euro last year to 47.4 million Euro on 12/31/01.

Short-term liabilities were reduced from 90.6 million Euro to 48.9 million Euro. Thereduction was primarily due to the resolution of a tax reserve and the reduction inreceivables. Customer downpayments remained near prior year levels while warrantyreserves fell in the face of the declining volume of business.

Long-term liabilities encompass pension reserves as well as liabilities from con-vertible bonds within the framework of a stock option program for leading employees.They rose slightly from 2.3 milion Euro last year to 3.4 million Euro at the time ofreporting. Overall, total liabilities are 40.5 million Euro lower than the 92.8 millionEuro volume last year and were 52.3 million Euro at the time of report.

O Solid Structure of Capital: Capital Ratio Continues to Climb

Based on the high 27.9 million Euro in net income, the corporations equity capitalrose by 28.9 million Euro to 135.4 million Euro, up 27.2 % from the 106.5 millionEuro last year. At 72.2 %, the equity ratio clearly exceeded the prior year’s 53.4 %rate. The equity capital not only fully covered fixed assets by the closing date but anadditional 69.2 % of the liquid assets (prior year 50.2 %). The rate of capitalization –measured as the pre-tax earnings to capital equity ratio – totals 31.3 % (prior year89 %). These key figures clearly demonstrate the extraordinary solidity of SINGULUSTECHNOLOGIES’ consolidated assets and capital structure.

The recommendation for utilization of earnings was made in accordance with theindividual closing of SINGULUS TECHNOLOGIES AG established by German law. Inaccordance with § 16.3 of the statutes, half of the 28.9 million Euro in annualearnings will be transferred to “other retained earnings”. As stipulated by resolutionin the General Shareholders Meeting, the remaining 14.5 million Euro in retainedearnings will also be rolled into “other retained earnings”.

35

SPACELINE Systems during Acceptance Test

O Earnings Retention Bolsters Corporate Strategy

The growing equity capital resulting from retained earnings is made available tothe company for the continuous development and launch of new products. This is ofgreat value to us as we operate in a market of intense research and technologydriven growth dynamics. For the first time we utilized significant liquid assets forthe purchase of the EMOULD and OMP companies. Future expansion of these busi-nesses will require additional financial support. As market leader we must be able tooperate proactively and must therefore be given a considerable amount of leewaywith regard to financial decisions.

Shares of Managing Board and subscription rights, 31.12.2001:

Shares à 1 Euro

Reiner Seiler 24,300 pieces

William Slee 19,520 pieces

Thomas Geitner 1,500 pieces

Stock subscription rights provided in form of convertible bonds à 1 Euro:

Roland Lacher 18,229 pieces

Reiner Seiler 72,900 pieces

Dr. Christian Holtmann 243,000 pieces

Employees 1,525,419 pieces

36

The long-standing buildup of our international sales and marketing organizationas well as spare parts and service created all the prerequisites needed to providerapid and efficient service to key markets around the world.

O Global Presence at the Local Level

On-site presence and the professional support of our installed customer base arecritial factors in successfully establishing long-term customer relationships. Theknow-how for the demanding process technology of our machines must constantlybe transferred from our headquarters to employees in the field and to our customers.

Our nine foreign subsidiaries complemented by a network of agents has allowedus to establish the best marketing and service organization in the industry. The newEMOULD and OMP machines and systems will also be integrated into this global net-work, enabling us to offer a complete portfolio of first-class products and services.Customer orders can be fulfilled from a single source using integrated, optimisedlogistics: Comprehensive solutions and service from a single source – around theclock and around the world.

In the past, a very proficient product management team was created to attend tomachines and systems newly introduced to the market and simultaneously solicitcustomer feedback.

The benefits have been bilateral: our customers benefit from the regular dialoguewith our professional specialists while we gain an early appreciation of customerrequirements that can be incorporated into the development of new products. Tothis end, special attention is given leading customers who have established industrystandards. The long-term intense dialogue with these customers was not inconse-quential in our rise to global market leadership.

Status Report 2001

Sales and Service

Staff

Status Report 2001

37

Our employees are characterized by their innovative spirit and multinationalismas well as customer orientation and sensitivity to quality. The primary objective ofour personnel policy is the retention of a corporate culture distinguished by flexi-bility, initiative, commitment and accountability among all employees.

In order to successfully manage organizational demands, the workforce wasincreased. On December 31, 2001, SINGULUS TECHNOLOGIES employed 367 people,15.2 % more than the year before. The 41-member staff at the newly-acquiredEMOULD GmbH contributed significantly to the higher employee count. Excludingthis new acquisition, the workforce rose by only 7 employees, or 2.1 %.

O Relieved Production Capacity

While production was adjusted to actual capacity requirements by a reduction ofapproximately 70 temporary employees, new staff was hired for the core Researchand Engineering departments. Staffing additions were also made to our worldwidesales and service network.

In light of our overall trim business model, the earnings per employee of 612, 200 Euro achieved in 2001 were remarkably high. The staff added as a result of the EMOULD acquisition are already included in the current figure. Despite therise in our workforce, personnel expenditures (prior to acquisition) were reducedfrom 25.3 million Euro in 2000 to 21.7 million Euro in 2001.

SINGULUS TECHNOLOGIES is a multicultural organization. Within the frameworkof our global presence, close customer relationships are forged, even in foreign markets. Contracts were executed in 38 different countries in 2001. 80 employees(23 % of our total workforce) work in our foreign subsidiaries. The average age ofour Kahl-based staff is 35. More than 30 % of our employees have advanced academic degrees.

Past experience has shown that graduates of technical and vocational schools aswell as universities are rapidly assimilated and quickly become productive membersof our workforce. We will continue to concentrate our energies on recruiting,advancing and securing the commitment of first-rate employees. Additionally, theworking environment provided will ensure that peak performance at all levels and inall areas will make organizational success visible and tangible for each individual.

38

O Concentration on Core Competencies

SINGULUS TECHNOLOGIES’ business model concentrates on the core competenciesof its value-added supply chain. These are: Research, Engineering, Procurement,Sales and Service. By comparision, the production area is very streamlined, concen-trating on the assembly and commissioning of complete lines. Compared to manu-facturers with multi-tiered operations, the capital expenditures needed for this business model are relatively low.

At 4.6 million Euro, capital expenditures in 2001 remain below the 7.8 millionEuro investments made the year before leading to a normalization at former year2000 levels. The year 2000 was strongly characterized by one-time investments inthe new building in Kahl am Main. Investments in capital expenditures easilyfinanced through positive cashflow were offset by write-offs totalling 2.1 millionEuro (prior year 1.9 million Euro).

O SAP Software Investments Enhances Efficient Integrated Workflow

The corporation invested in new SAP software and as of January 2001 the entireprocess in our value added supply chain was controlled by the SAP System R3.During the course of fiscal 2001 the SAP software was used to fine-tune the processflow of various projects. The lean manufacturing levels in SINGULUS’ own businessmodel demand professional logistical organization from order entry to installation ofthe delivered machine. The implementation and further development of the process-oriented SAP R3 software ensures that we are well prepared for the future.

O 2001: Unprecedented External Growth

SINGULUS TECHNOLOGIES made an investment unprecedented in its history whenit acquired the external company EMOULD GmbH at a cost of 9.9 million Euro. Thisaction was the result of a strategic objective to master the entire optical disc manu-facturing process and further expand the companys’ global leadership as a systemsmanufacturer for all optical disc formats. By purchasing EMOULD and supplying itsown injection moulding machine, SINGULUS intends to significantly raise the weakgross margins on these formerly outsourced machines.

Status Report 2001

Capital Expenditures and Financing

39

On January 1, 2002, SINGULUS TECHNOLOGIES also acquired 100 % of OMP sharesfor 22.6 million Euro. Half of the takeover payment was made with cash and newshares from authorized capital. For this purpose, 379,110 new shares were issued at1 Euro each raising the share capital to 36,815,550 shares, corresponding to approx-imately 1 % of former share capital.

The integration of both acquired companies (EMOULD, OMP) into the SINGULUSgroup is proceeding according to plan.

O New Year Entered Debt-Free

In the wake of a reduction in the volume of business, cash flow (the sum of annualearnings and all write-offs) declined by 40.6 % to 29.6 million Euro last year (prioryear 50 million Euro). Working capital (liquid assets less short-term liabilities) roseby 13.3 million Euro over the prior year. A decline in accrued taxes and receivableswere major contributing factors. This was counteracted by a disproportionate reduc-tion of inventories compared to the adjusted volume of business. The company’s netindebtedness is zero.

Liquid assets rose from 41.4 million Euro last year to 47.4 million Euro during the year in report, up 6 million Euro or 14.5%. As evidenced by the balance sheet,SINGULUS TECHNOLOGIES not only financed investments, acquisitions and anexceptional tax payment by liquid means, it managed to generate additional liquidfunds. Even in deteriorating economic conditions, the company again demonstratedthe strength of its financial self-reliance and is well-equipped to accept new challenges.

Cash Flow in Mio EUR

1997

1998

1999

2000

2001

50 45 40 35 30 25 20 15 10 5 0

10.95

12.29

25.65

49.96

29.60

Status Report 2001

40

Corporate Control and Transparency Act

O Risk Report

Within the scope of its global enterprises, SINGULUS TECHNOLOGIES Corporation isexposed to a wide range of risks inextricably linked to its enterpreneurial operations.The early and complete identification, analysis and professional management of theserisks are indispensable prerequisites for ensuring the corporation’s long-term success.Risk Management is an integral part of the management system at SINGULUSTECHNOLOGIES. All business processes are subject to an internal review and moni-toring system that identifies risks early and permits the timely implementation ofcountermeasures.

O Substantive Risks

The following dependencies have been identified as significant risk factors: The corporation’s success arises from the effective sale of optical disc replicationmachines and first-rate service. Should market and economic fluctuations set off areduction in demand, revenues could significantly decline. The company recognizes a particular vulnerability to potential trade-based flucutations in demand in theAsian markets which represent 44 % of revenues (prior year 52 %).

Markets are generally determined by intense competition which affects pricing,demands on product quality, and finance terms. Aggressive price competition canmarkedly impact margins.

For two years production overcapacity has been most evident in the once-record-able CD-R market which has led to delays in planned investments and an, in part,cyclical decline in demand.

SINGULUS TECHNOLOGIES engages in observation of the market and has takenappropriate measures to adjust to stronger cyclical behaviors. Earnings risks from a reversal in demand or price eroson are minimized by permanent technologicalproduct improvements, adjustment to purchase conditions as well as optimization of our value-added supply chain. The strategic focus on an expanded portfoliowhich constantly offers new products with strong margins is a substantial part ofour success.

All measures related to capacity risks are supported by our general concept andbusiness model for streamlined production without extended manufacturing levelsand high fixed costs. This profit-oriented business model is also practiced by ourrecently acquired companies EMOULD GmbH and OMP BV.

Risks posed by customer payment practices can be averted by delivery againstletters of credit, particularly in the Asian market. Risks arising from customerfinancing are controlled by credit risk management, and currency risks are generallyaverted by securing exchange rates.

Our procurement needs are secured by implementing appropriate long-term framecontracts. Regular quality audits are conducted to eliminate vendor-related qualityrisks.

Our risk management system implements the regulations set forth by KonTraG. Asa corporation registered on the stock exchange, we have cooperated with our auditorsand the Supervisory Board in examining the instruments for early recognition ofrisks and internal controlling. It was determined that the instruments and measuresemployed by the corporation’s early warning system exceed legal mandates and aresuited for the timely identification of risks with the potential to jeopardize the company’s survival.

With the help of our auditors we will endeavor to further develop our risk manage-ment system in 2002. The Managing Board is convinced that no risks endangeringthe corporation’s future can be identified for the current fiscal year or beyond.

O Corporate Governance

The Managing Board, Supervisory Board and executives at SINGULUS TECHNOLOGIESendorse the principles of corporate transparency, accountability and control whichserve to preserve and strengthen the confidence of shareholders, employees, businesspartners and the public in general.

As such, the company’s managing bodies support and are willing to voluntarilyacknowledge and comply with the German Corporate Code of Governance aspresented in the Government Commission’s February 2002 proposal (CrommePaper?).

41

42

O New Growth in Core Optical Disc Replication Line Business

The global optical disc replication line markets were permeated by a period ofconsolidation in 2001. Towards the end of the year, however, a renewed sense ofrestlessness became palpable among our U.S. and European customers, triggered bystrong DVD sales at Christmas. DVD players and DVD video emerged as bestsellerswith MICROSOFT delivering 1.5 million X-Box DVD-ROM game consoles to the U.S.market. Sales to Europe are expected to follow in March 2002.

The new mood of invigoration transferred into the first quarter of 2002: within afew weeks our customers placed extensive orders for new DVD lines far exceedingthose placed last year. Our production will have to be ramped up in order to meetthe delivery dates specified by our customers.

Additional new business impulses are generated by the demand for recordable DVDreplication lines. Customers around the world are investing in pilot systems in orderto acquaint themselves with the different and more difficult process technology ascompared to CD-R. Expectations for a developing commodity market are high sincethe DVD-R represents a cost-effective format for recording digital home videos. Thisproduct will also be particularly attractive to Asian consumers who have thus faronly been exposed to and used a small number of VHS recorders.

A greater number of pilot installations are also expected for rewritable DVD repli-cation systems this year, i.e., instead of just metallizers as in 2001. Fortunately, initialorders for comprehensive lines have already been placed by European customers.Asian demand will not be far behind as this region is the seat of the largest record-able CD and DVD manufacturers who will be strongly commited to the rewritableDVD.

Only the status of CD and CD-ROM system sales remains somewhat uncertain for2002 and will depend chiefly on demand from Asia, China in particular. The admissionof China to the WTO can certainly be seen as a positive sign in this regard. The foreigncapital made available for investments in China, especially from Taiwan, will be ofparticular interest.

O Integration of the New SINGULUS EMOULD and SINGULUS OMP Affiliates

The rapid and smooth integration of our new affiliates is of the utmost priorityfor the successful development of the corporation. Customers’ high rate of accept-ance of the SINGULUS EMOULD fully-electric injection moulding machine has been

Fiscal 2002 Forecast

Status Report 2001

43

gratifying. The change from formerly outsourced equipment to the current SINGULUS-owned product no longer poses a problem. Accordingly, our acquisition was theright step at the right time: Apparently the market is now ready to switch from thehydraulic to the fully-electric injection moulding machine. SINGULUS EMOULD hasgained a considerable amount of trust as a current member of the consolidatedcompanies and as such worldwide sales of EMOULD injection moulding machines incombination with all of our replication lines will increase significantly.

SINGULUS OMP will also benefit from integration into the worldwide SINGULUSmarketing organization, predominantly in the USA where very few mastering instal-lations have taken place thus far. Here too, it has become apparent within a shortamount of time that our name will open doors for OMP as well.

O Changes in the Competitive Field

The dissolution of two rival companies last year, along with SINGULUS TECHNO-LOGIES’ leading position in the market and plans for the further expansion of itsproduct portfolio leave the company well-positioned to capture the market sharethat has now become available. This will presumably be accompanied by intenseprice wars among the remaining competitors. The company UNAXIS, formerly acompetitor only for metallizers, has announced its intentions to expand into the line business. The addition of a new rival for complete systems should be taken seriously.

O Positive Expectations for 2002

Overall we are optimistic that SINGULUS TECHNOLOGIES will not only defend itscurrent position in the market but will strengthen it. As in the past, new productswill be introduced in 2002 which will engage our unaltered, strong innovative capabilities and satisfy the highest customer utilization requirements. Following ayear of consolidation, the corporation’s overall goals are once again directed towardsgrowth and expansion.

Over 1,100 SKYLINE SystemsDelivered Gave us theLeading Position Worldwide

44 Fascinating Optical Storage Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 46

The Future Belongs to DVD Machines . . . . . . . . . . . . . . . . . . . . . . . . . Page 48

Acquisition of EMOULD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 52

Acquisition of OMP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 54

SINGULUS-Machines

Table of Contents

S I N G U L U S

45

SPACELINE

M a c h i n e s

SPACELINE with two EMOULDInjection Moulding Machines

Fascinating Optical Storage Media

46

Some Technical Terms

O What is CD-ROM and DVD?

The “Compact Disc Read-Only Memory” is the most portable and economical datastorage medium available to the consumer. Will DVR-(Blu-Ray Disc) soon becomethe storage medium with the most data density?

Displacement of the music cassette and LP has continued for twenty years. Todaythis displacement can be viewed as complete. The CD-ROM is a data carrier thatcannot be re-recorded. More recent variations of this technology can be recordedonce or repeatedly.

Mastering is the first step in the manufacture of a prerecorded CD or DVD. Duringthis process digital information (bits) such as music, films or programs are convertedinto pits (physical profiles) which are then stamped onto a blank disc by the injectionmoulding machine. The result is known as a glass master from which stampers arecreated by means of galvanic forming. The actual replication of discs is performedby the stampers that are inserted into a mold in the injection moulding machine.The stampers are essentially templates that transfer information onto all subsequentlypressed discs.

The formation of the actual CDs during the injection moulding process is knownas “moulding” in industry jargon. During this process the carrier substrate is heatedto appr. 350 °C and formed by the stamper. A CD consists essentially of the polycar-bonate substrate onto one side of which a layer of aluminum is sputtered (theprocess is called “metallizing”). A permanent protective lacquer coating is thenapplied to seal the aluminum layer.

Audio CDs and CD-ROMs for computer use belong to the family of optical storagemedia not only because the stored data is “read”, but because it is probed using alaser beam. Data is concealed in the systematic configuration of various pits.

The conventional music CD and the CD-ROM are essentially identical. One onlyneeds different players (a CD-ROM drive in a computer for the latter) to read theappropriate data.

Audio-CD, CD-Card

47

The demand for storage has grown over time as a result of applications in the CDrealm such as growing program libraries, digital videos and computer games thatrequire more storage space. With the help of data compression technology as wellas a new generation of “digital versatile disc” optical media, the technology hasadvanced into a new dimension of storage capacity. The DVD is primed to becomethe successor of the video cassette.

The fundamental technical advance for DVD-ROM is the joining of two poly-carbonate discs with different reflective layers. This adhesion process is known as bonding.

By their nature, “ROMs” can only be read, not recorded. Areas of application wereonce envisioned for which a non-recordable CD or DVD would have been welcomed,especially for personal (TV tapes, music copies) and EDP use (recurring data securityfunctions). Formats have since emerged for both applications: once-recordable (withthe suffix “R” for “recordable”) as well as rewritable formats (with the following suf-fixes, each representing “rewritable”: “-RW” by PIONEER, “+RW” used by PHILIPS and“RAM” by HITACHI, TOSHIBA and PANASONIC).

Despite great advances, the technical development of optical data storage mediais far from over. The most recent DVDs feature capacities of up to 18 GB. A newgeneration of DVD, the so-called DVR, with a storage capacity of up to 27 GB, iscurrently in the developmental stages. Destined for use in High Definition TV, itemploys a blue instead of red laser beam which creates a higher storage density.

SINGULUS TECHNOLOGIES manufactures machines for the production and replication of all six formats – CD-ROM, CD-R, CD-RW, DVD-ROM, DVD-R, andDVD±RW/RAM. These production systems are known in the industry as “replicationlines”. The SINGULUS machines integrate all manufacturing processes from moulding,metallizing, lacquering up to and including DVD bonding. The lines for the productionof rewritable DVD can accomodate all three manufacturer standards – -RW, +RWand RAM.

DVD-Video and DVD-RAM

48

O SPACELINE and SUNLINE Systems

Unlike any other German company, SINGULUS TECHNOLOGIES’ strategy has con-centrated on DVD. In 1997, the SPACELINE was introduced as the world’s first high-effiency replication line for the mass(inline) production of prerecorded DVD.

This product enabled SINGULUS to attain its preeminent position in the worldmarket. Now two out of every three DVD discs are produced on a SPACELINE.

The next challenge is the mass production of rewritable DVD formats which areslated to replace VHS technology (magnetic tape video cassette). Rewritable DVDsoperate on the so-called “phase change” principle. By emitting short bursts of light,the recorder’s laser beam can burn dark marks onto the light background of a DVD-RW. These dark marks can then be read as binary information by a DVD player. Byusing less intense, longer bursts of light, the recorder can then completely erase orwrite over the marks.

SINGULUS launched the MODULUS sputtering system in the summer of 2000. It isthe nerve center of the new SUNLINE replication system that made its debut in theFall of 2001.

The development of the SUNLINE replication system for all rewritable disc formatswas successfully concluded after two years of development. SINGULUS thus becamethe first company to offer a turnkey, fully integrated replication system for all re-writable formats. To our knowledge, there are only three vendors capable of deliveringsuch a solution in the foreseeable future.

In our estimation, consumer sales of rewritable DVD units for video and PC appli-cations has enormous potential. Following introduction of the first DVD recorders byPIONEER, PHILIPS, PANASONIC and other manufacturers, the rewritable DVD with itsinherent digital quality is expected to incrementally replace the analog VHS-videocassette.

The market volume for rewritable DVD is expected to number in the billions ofunits. The ensuing increase in demand will trigger orders for fully automated repli-cation lines. We expect clear growth in the new business sector for rewritable CD-RW as well as DVD-RW, DVD+RW and DVD-RAM formats through the sale of MODULUS metallizers in concert with SUNLINE replication lines.

SINGULUS-Machines

The Future Belongs to DVD Machines

49

50

SINGULUS-Machines

The Future Belongs to DVD Machines

The first two complete SUNLINE systems were sold in Europe last year, success-fully concluding the launch of these strategically critical innovations.

The sale of initial lines along with the sale of additional MODULUS metallizers tokey customers such as PIONEER, reinforces our strong position in this new growthmarket.

O Early Focus on DVD Technology

The SPACELINE label is defined by its early focus on DVD technology. In the yearsimmediately following its launch, the stabilization of processes and steadilyincreased productivity of DVD replication became paramount. Intense work was alsodone on expansion of the layer spectrum to include gold, silicon and silver.

Today further increases in output remain a top priority. The yield per machine hasbeen raised to 18,000 good DVD discs per day; the 20,000 mark is our next goal.Production experience gained from several hundred systems as well as countlessdetail improvements have all contributed to the current SPACELINE concept.

The integration and improved synchronization of the SINGULUS-acquiredEMOULD injection moulding machines will further raise the level of output.

SINGULUS TECHNOLOGIES did develop its own CD-R line after the launch of theSPACELINE DVD replication line; the expected market growth and its associatedchances for success were greater in the DVD sector. Nevertheless, the STREAMLINEreplication line, new at that time, was rapidly accepted by the market during the1999 boom in CD-R.

In the interim, further developments have been prioritized to include optimizationof process steps and software upgrades in particular. Effective 2002, SINGULUSTECHNOLOGIES is able to offer the CD-R STREAMLINE at a 2.7 second cycle time(average time to produce a disc).

51

CD-R Replication LineSTREAMLINE with twoEMOULD InjectionMoulding Machines

Last year SINGULUS TECHNOLOGIES concentrated on enhancing the base machineto include the production of DVD-R. A number of machines have already been sold in this new configuration, which made its debut as the STREAMLINE Duplex.SINGULUS TECHNOLOGIES has added a competitive machine to its 2002 arsenal in time for the growth expected in DVD-R.

O SKYLINE Replication Lines for Compact Discs (CD-ROM, CD-Video) – Benchmark for the CD Sector

Our replication machines for prerecorded CDs, whether CD-ROM for PC applicationsor music CDs, have reached their full technological maturity. We have held the lead-ing position in this sector for years with over 1,100 SKYLINE systems deliveredworldwide. In terms of its quality, reliability and technical standards our SKYLINE CDreplication line has become the benchmark in the optical disc industry.

52

O 2001: Unprecedented External Growth Implements Business Strategy

Effective on October 1, 2001, SINGULUS TECHNOLOGIES acquired 100 % of EMOULDGmbH shares. The acquisition of the injection moulding machine manufacturer basedin Wuerselen near Aachen was strategically significant as it provided us with decisivesales and service advantages while securing our technological lead over the compe-tition.

After mastering, the first step in the manufacture of optical discs in a replicationline is injection moulding, which produces a blank plastic disc. On a CD replicationline, this machine segment alone accounts for 50 % of manufacturing costs.

The acquisition of EMOULD now enables us to supply a comprehensive line,including moulding, using our own resources. By assuming full control of all costswe have become more flexible and competitive.

Our entry into injection moulding technology was the right move at the right time.Aside from Japanese competitors, SINGULUS EMOULD is the only manufacturer ofelectromechanical injection moulding machines in the world able to supply a mature,production-ready machine for optical disc application. In response to pressure fromthe market, other machine manufacturers are only now joining the paradigm shiftfrom hydraulically- to electromechanically-controlled machines. Electromechanicalmachines are much more precise than their hydraulic predecessors. Furthermore, anearly 65 % reduction in energy consumption substantially shortens the amortizationperiod. The SINGULUS EMOULD injection moulding machines are proven and can beemployed in the manufacture all disc formats (including DVD-RW).

O SINGULUS EMOULD: Key Data

● Founded in 2000 as a DEWB AG (Jenoptic AG) holding company.● Product development of all-electric injection moulding machines for all CD- and

DVD-formats; long-term agreement with the Japanese manufacturer FANUC for the distribution and exclusive marketing of fully electromechanically-controlled injection moulding machines in the optical disc market.

● 41 Employees● October 1, 2001: Acquired by SINGULUS TECHNOLOGIES AG; cash funding of

9.9 million Euro Purchase Price for 100 % of sharecapital.

External Growth

Administration andManufacturing ofSINGULUS EMOULDGmbH, Würselen/Aachen

Acquisition of EMOULD

53

54

External Growth

Right picture: DIAMONDMastering System fromOMP

Acquisition of OMP

O Acquisition of OMP

At the close of fiscal 2001 we broadened our product portfolio to include master-ing – another process used in optical data storage manufacturing. All shares ofOptical Measuring Equipment & Projects (OMP), Best, the Netherlands, were acquiredeffective January 1, 2002.

Mastering converts digital music, data- or video information into pits which arethen stamped onto blank discs by the injection moulding machine. Mastering is,therefore, a precursor to the actual replication process. The acquisition of OMPadvanced SINGULUS TECHNOLOGIES into the lead as a comprehensive supplier of all technologies used to manufacture CDs and DVDs.

The acquisition secured yet another strategic competitive advantage: mastering isat the forefront in the advancement of popular disc formats and even more so in re-search into new data storage media. Of note is OMP’s emergence from the legendaryPHILIPS RESEARCH LABORATORIES where the compact disc was invented. The acqui-sition of OMP will assure our involvement in the development of new formats at amuch earlier stage. Consequently, this acquisition will enable us to both expand andsecure our technological lead.

SINGULUS OMP and its modern mastering systems are well-established in themarket. The company’s current product, the Master DMS 8000, yields high productquality as a result of the photoresist technology employed. The system affords atypical customer with capacity requirements of 4,000 to 5,000 masters per year themost cost-effective production available.

Like its parent company SINGULUS TECHNOLOGIES, SINGULUS OMP operates avery streamlined organization. This is primarily due to the company’s concentrationon its core competencies of marketing and sales, product development and engineer-ing, assembling, commissioning and customer support. Based on the company’s totalrevenues and return on investment, we expect the takeover to contribute noticeablyto our consolidated financial statement in 2002.

O SINGULUS OMP: Key Data

● Founded in 1994● Specializing in the manufacture and development of mastering systems for CD

and DVD optical data storage media● Management from the ranks of PHILIPS RESEARCH LABORATORIES● 35 Employees● Payment of 22.6 Million Euro Purchase Price: Half in liquid funds and half through

the issuance of authorized share capital (approx. 1 % of ordinary share capital)● 2001: 15 Million Euro in revenues with a double-digit net operating margin● Headquarters: Best, Netherlands

55

5656 Year End Closing for SINGULUS TECHNOLOGIES CONSOLIDATED as of 12/31/01 . . . . . . . . . Page 56

Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 58

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 60

Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . Page 62

Consolidated Statements of Shareholders’ Equity . . . . . . . . . . . . . . . . Page 63

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . Page 64

Fixed Assets Movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 66

Notes to Consolidated Finincial Statements . . . . . . . . . . . . . . . . . . . . Page 68

Annual Report 2001 HGB as of 12/31/01 . . . . . . . . . . . . . . . . . . . . . . . Page 91

Balance Sheets of SINGULUS TECHNOLOGIES AG . . . . . . . . . . . . . . . . Page 92

Income Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 94

Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 96

Consolidated

Table of Contents

Year End Closing 2001

57

Report 2001

58

Report of Independent Auditors

“We have audited the consolidated financial statements of SINGULUS TECHNOLOGIESAG as of December 31, 2001, including the consolidated balance sheet and the relatedconsolidated statements of income, cash flows, stockholders’ equity and notes to theconsolidated financial statements for the fiscal year then ended.

The legal representatives of the company are responsible for the preparation andcontent of the consolidated financial statements. Our responsibility is to express anopinion, based on our audit, whether these consolidated financial statements are inaccordance with United States generally accepted accounting principles (US GAAP).

We conducted our audit of the consolidated financial statements in accordancewith the German auditing rules and in compliance with the German generally acceptedstandards for the audit of financial statements promulgated by the Institute of PubicAuditors in Germany (Institut der Wirtschaftsprüfer in Deutschland). Those standardsrequire that we plan and perform the audit to obtain reasonable assurance such thatthe consolidated financial statements are free of material misstatement. In establish-ing the audit procedures we considered our knowledge about the group's businessoperations, its economic and legal environment, and expectations of possible errors.

An audit includes examining, on a test basis, evidence supporting the amountsand disclosures in the consolidated financial statements. The audit also includesassessing the accounting principles used and significant estimates made by the legalrepresentatives, as well as evaluating the overall presentation of the consolidatedfinancial statements. We believe that our audit provides a reasonable basis for ouropinion.

In our opinion, the consolidated financial statements present a true and fair viewof the group’s financial position, results of operations and cash flows in accordancewith US GAAP.

Our audit, that also included the group management report prepared by Company’smanagement for the fiscal year from January 1, 2001 to December 31, 2001, has notled to any reservations. In our opinion, the group management report together withthe additional disclosures in the consolidated financial statements conveys a suitablepresentation of the situation of the Group taken as a whole and presents the risks offuture developments adequately.

Consolidated Report 2001

Report of Independent Auditors

59

Additionally, we confirm that the consolidated financial statements, and the groupmanagement report for the fiscal year from January 1, 2001, to December 31, 2001,meet the requirements for exempting the Company from preparing consolidatedfinancial statements and a group management report in accordance with the rulesand regulations of the German Commercial Code.”

Arthur AndersenWirtschaftsprüfungsgesellschaftSteuerberatungsgesellschaft mbH

sgd. Groß sgd. SecklerWirtschaftsprüfer Wirtschaftsprüfer(German Public Auditor) (German Public Auditor)

Eschborn/Frankfurt am Main, February 27, 2002

Consolidated Balance Sheets

60

Consolidated balance sheets as December 31, 2001 and 2000Assets

Note Dec. 31, 2001 Dec. 31, 2000No. KEUR KEUR

Cash and cash equivalents 47,431 41,430

Trade accounts receivable, net (4) 61,214 57,747

Other receivables (4) 4,264 3,995

Total accounts receivables, net 65,478 61,742

Raw and packing materials 24,510 33,313

Work in process and finished goods 31,124 46,558

Prepayments to suppliers 1,067 3,229

Inventories, net (5) 56,701 83,100

Total current assets 169,610 186,272

Property, plant and equipment, net 9,321 8,827

Intangible assets, net 3,701 379

Total fixed assets 13,022 9,206

Deferred tax assets (12) 5,030 3,854

Total assets 187,662 199,332

Consolidated Report 2001

61

Consolidated balance sheets as December 31, 2001 and 2000Liabilities

Note Dec. 31, 2001 Dec. 31, 2000No. KEUR KEUR

Bank overdrafts and borrowings 0 41

Trade accounts payable 14,495 24,889

Other current liabilities (6) 9,957 12,602

Progress payments (6) 8,427 14,535

Tax accruals 5,284 29,855

Other accruals (8) 10,731 8,646

Total current liabilities 48,894 90,568

Convertible bonds (6) 1,179 569

Pension accruals (7) 2,183 1,711

Total long-term liabilities 3,362 2,280

Total liabilities 52,256 92,848

Share capital (36.,436,440 and 36,321,312, respectively, authorized, issued andoutstanding ordinary shares) (9) 36,436 36,321

Additional paid-in capital (9) 15,197 14,684

Retained earnings 82,668 54,733

Accumulated other comprehensive income 1,105 746

Total shareholders’ equity 135,406 106,484

Total liabilities and sharholders’ equity 187,662 199,332

62

Consolidated Report 2001

Consolidated Statements of Income

Consolidated statements of income for the years ended December 31, 2001 and 2000

Note Dec. 31, 2001 Dec. 31, 2000No. KEUR % KEUR %

Gross revenues (14) 225,525 105.7 375,722 108.6

Sales deductions and direct distribution cost -12,254 -5.7 -29,682 -8.6

Total net revenues 213,271 100.0 346,040 100.0

Cost of goods sold -139,007 -65.2 -215,638 -62.3

Gross profit 74,264 34.8 130,402 37.7

Research and development -8,307 -3.9 -9,014 -2.6

Sales and customer services -11,268 -5.3 -12,365 -3.6

General management and administration -6,993 -3.3 -7,853 -2.3

Other operating income/(expenses) -7,469 -3.5 -7,752 -2.2

Total operating expenses -34,037 -16.0 -36,984 -10.7

Operating income (EBIT) 40,227 18.9 93,418 27.0

Interest income (net of interest expense) (11) 2,221 1.0 1,306 0.4

Income before tax 42,448 19.9 94,724 27.4

Income tax (12) -14,513 -6.8 -46,069 -13.3

Net income 27,935 13.1 48,655 14.1

Other comprehensive income:

Currency translation adjustment 359 303

Comprehensive income 28,294 48,958

Earnings per share – basic (in EUR) 0.77 1.35

Earnings per share – diluted (in EUR) 0.74 1.30

Weighted average shares outstanding – basic 36,361,342 36,321,312

Weighted averageshares outstanding – diluted 37,941,709 37,548,000

63

Consolidated statements of shareholders' equity for the years ended December 31, 2001 and 2000

Accumu-lated other Total

Additional compre- share-Share- paid-in- Retained hensive holders'capital capital earnings income equityKEUR KEUR KEUR KEUR KEUR

Balance at December 31, 1999 18,101 13,799 24,179 443 56,522

Capital increase 18,220 885 -18,101 1,004

Currency translation adjustment 303 303

Net income 48,655 48,655

Balance at December 31, 2000 36,321 14,684 54,733 746 106,484

Capital increase 115 513 628

Currency translationadjustment 359 359

Net income 27,935 27,935

Balance at December 31, 2001 36,436 15,197 82,668 1,105 135,406

Consolidated Report 2001

Consolidated Statements of Cash Flows

Consolidated statements of cash flowsfor the years ended December 31, 2001 and 2000

Dec. 31, 2001 Dec. 31, 2000

KEUR KEUR

Cash flows from operating activities

Net income 27,935 48,655

Adjustments to reconcile net income tonet cash provided by operating activities

Depreciation 2,084 1,880

Additions to pension accrual 264 178

Other non-cash expenses/income -176 0

Deferred taxes -502 1,670 -753 1,305

29,605 49,960

Changes in operating assets and liabilities

Trade accounts receivable, net -71 -21,513

Other receivables 174 266

Inventories, net 31,452 -33,610

Trade accounts payable -11,723 741

Other current liabilities -3,373 5,586

Progress payments -6,805 -5,641

Tax accruals -24,571 15,560

Other accruals 1,592 -13,325 3,426 -35,185

Net cash provided by operating activities 16,280 14,775

64

Cash flows from investing activities

Purchase of fixed assets -4,504 -7,794

Disposal of fixed assets 2,547 50

Cash paid for the acquisition ofconsolidated companies less cash acquired -9,828 -11,785 0 -7,744

Net cash used in investing activities -11,785 -7,744

Cash flow from financing activities

Increase in liquid funds fromfactoring of accounts receivables 0 2,878

Decrease in employee loans 0 39

Decrease in bank overdrafts and borrowings -41 -41

Increase in convertible bonds 743 363

Capital increase 804 1,506 1,003 4,242

Net cash provided by financing activities 1,506 4,242

Net increase in cash and cash equivalents 6,001 11,273

Cash and cash equivalents, beginning balance 41,430 30,157

Cash and cash equivalents, ending balance 47,431 41,430

Supplemental cash flow disclosures

Cash paid for interest 595 165

Cash paid for income taxes 40,260 20,883

Dec. 31, 2001 Dec. 31, 2000

KEUR KEUR

Consolidated statements of cash flowsfor the years ended December 31, 2001 and 2000

65

66

Consolidated Report 2001

Fixed Assets Movement

Consolidated fixed assets movement schedule for fiscal year 2001

Acquisition and production cost

CurrencyReclassi- translation

01/01/2001 Additions Disposals fications differences

KEUR KEUR KEUR KEUR KEUR

Property, plant and equipment

Land, land rights and buildingsincluding buildings on third party land 3,300 32 0 89 0

Technical equipment and machines 613 6 3 0 0

Other equipment, factory and officeequipment 7,253 875 2,511 0 2

Equipment under operating leases 0 3,645 0 0 0

Payments on account and assetsunder construction 89 0 0 -89 0

11,255 4,558 2,514 0 2

Intangible Assets

Concessions, industrial and similar rightsand assets and licenses in such rights and assets 876 104 0 0 4

Intangible pension asset 0 208 0 0 0

Goodwill 0 3,217 0 0 0

876 3,529 0 0 4

12,131 8,087 2,514 0 6

67

Accumulated depreciation Net bool values

Currency12/31/ translation

2001 01/01/2001 Provisions Reversals differences 12/31/2001 12/31/2001 12/31/2000

KEUR KEUR KEUR KEUR KEUR KEUR KEUR KEUR

3,421 63 120 0 0 183 3,238 3,237

616 137 65 2 0 200 416 476

5,619 2,228 1,027 340 18 2,933 2,686 5,025

3,645 0 664 0 0 664 2,981 0

0 0 0 0 0 0 0 89

13,301 2,428 1,876 342 18 3,980 9,321 8,827

984 497 208 0 3 708 276 379

208 0 0 0 0 0 208 0

3,217 0 0 0 0 0 3,217 0

4,409 497 208 0 3 708 3,701 379

17,710 2,925 2,084 342 21 4,688 13,022 9,206

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SINGULUS TECHNOLOGIES AGNotes to the Consolidated Financial Statements as of December 31, 2001

O Note 1 – Basis of Preparation

The accompanying consolidated financial statements present the operations ofSINGULUS TECHNOLOGIES AG and its subsidiaries (the “Company”).

All amounts are stated in thousand Euro (KEUR) unless mentioned otherwise. Priorto the year ended December 31, 2001, the Company reported in Deutsche Marks (DEM).In fiscal year 2001, the Company adopted the Euro as its reporting currency andaccordingly has prepared this year’s financial statements in Euro. The consolidatedfinancial statements for prior years have been prepared using Deutsche Marks as thereporting currency and have been restated in Euro for each period presented usingthe official fixed conversion rate (EUR 1 = DEM 1.95583).

Certain prior year balances have been reclassified to confirm with the Company’scurrent year presentation.

The accompanying consolidated financial statements have been prepared in accor-dance with accounting principles generally accepted in the United States (“U.S. GAAP”).Following the regulations of the New Market (Neuer Markt) the financial statementshave to be prepared in accordance with IAS or U.S. GAAP. The consolidated financialstatements have been prepared in accordance with the EC 7th Directive based on theinterpretation of the Directive by GAS 1 “Exempting consolidated financial statementsin accordance with § 292a of the German Commercial Code” issued by the GermanAccounting Standards Committee (GASC). According to the German Commercial Code(“HGB”), the Company, since it is listed on a German Stock Exchange, is exempt frompublishing consolidated financial statements according to German generally acceptedaccounting principles (“German GAAP”). German GAAP varies in certain respects fromU.S. GAAP. Since the Company maintains its books and records in German GAAP, certain adjustments have been recorded for the preparation of these consolidatedfinancial statements in accordance with U.S. GAAP. These adjustments primarilyrelate to deferred tax assets due to deductible temporary differences, differences fromconsolidation, accounting for leases, accounting for pension obligations, accountingfor stock based compensation as well as accounting for business combinations andgoodwill.

Notes

Consolidated Report 2001

69

O Note 2 – Description of Business

The Company is engaged in the development, manufacturing and distribution ofCD-metallizers for CD-audio/CD-ROM, CD-R and DVD coating and replication linesfor the mentioned products. Metallizers are distributed under the name “SINGULUS”and “MODULUS” and replication lines under the names “SKYLINE” for CD-audio/CD-ROM, “STREAMLINE” for CD-R and “SPACELINE” and “SUNLINE” for DVD.

O Note 3 – Summary of Significant Accounting Policies

O Principles of Consolidation

The consolidated financial statements include all companies in which theCompany has legal or effective control. The following subsidiaries are included:

● SINGULUS EMOULD GmbH, Würselen, Germany● SINGULUS TECHNOLOGIES Inc., Windsor, USA● SINGULUS TECHNOLOGIES Ltd., Swindon, UK● SINGULUS TECHNOLOGIES ASIA PACIFIC Pte. Ltd., Singapore● SINGULUS TECHNOLOGIES LATIN AMERICA, Sao Paolo, Brazil● SINGULUS TECHNOLOGIES, Sant Cugat des Vallés, Spain● SINGULUS VIKA CHINA LIMITED, Wanchai, Hong Kong● SINGULUS TECHNOLOGIES FRANCE, Valence, France● SINGULUS TECHNOLOGIES ITALIA s.r.l., Senigallia (Ancona), Italy

All subsidiaries are directly or indirectly wholly owned, except SINGULUS VIKACHINA LIMITED, in which the Company holds a stake of 51 %.

The equity and net income attributable to minority shareholders’ interests are shownseparately on the balance sheet and income statement, respectively. However, if theminority shareholders’ share of losses exceeds the carrying amount of their interestsin equity, this carrying amount is adjusted to nil and the recognition of losses is discon-tinued. Therefore, no equity or net income attributable to minority shareholders’ inrespect to SINGULUS VIKA CHINA LIMITED has been recognized as of December 31,2001. The total of unrecognized shares of losses attributable to minority shareholders’amounts to TEUR -20 as December 31, 2001, and TEUR -18 as of December 31, 2000.

70

The results of operations for businesses acquired are included in the consolidatedfinancial statements from their respective date of acquisition. All significant intercom-pany balances and transactions have been eliminated in consolidation.

O Acquisitions

Effective October 1, 2001, the Company acquired a 100 % equity interest in EMOULDGmbH, Würselen, Germany for KEUR 9,900. The Company accounted for this businesscombination in accordance with SFAS 141, “Business Combinations”. The resultingGoodwill of KEUR 3,217 is not amortized but is subject to an annual impairment testin accordance with SFAS 142, “Goodwill and Other Intangible Assets”.

O Foreign Currency Translation

The financial statements of the Company’s foreign subsidiaries are measured in thecurrency in which that entity primarily conducts its business (the functional currency).The functional currency of all these subsidiaries is the applicable local currency. Thetranslation of the applicable foreign currency into Euro is performed for balance sheetaccounts using current exchange rates in effect at the balance sheet date, except forsubsidiaries’ share capital which is translated at the relevant historical rate, and forrevenue and expense accounts using the weighted-average rates of exchange prevail-ing during the year. The unrealized gains and losses resulting from such translation areincluded in accumulated other comprehensive income.

Gains (losses) from foreign currency transactions are charged or credited to currentincome.

O Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requiresmanagement to make estimates and assumptions that affect reported amounts ofassets and liabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expenses duringthe reporting period. Actual results could differ from these estimates.

O Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, prod-ucts have been shipped (in case of metallizers – without MODULUS – and mouldingmachines), acceptance by customers has been obtained (in case of replication lines)

Notes

Consolidated Report 2001

71

or services have been rendered, the price of the transaction is fixed and determinableand collectability is reasonably assured.

Revenues are recognized excluding value-added tax and net of goods returned,trade discounts, and allowances.

In December 1999, the Securities and Exchange Commission (SEC) issued StaffAccounting Bulletin 101, “Revenue Recognition in Financial Statements” (SAB 101).SAB 101 outlines the SEC’s views on applying generally accepted accounting principlesto revenue recognition in financial statements. Specifically, the bulletin provides bothgeneral and specific guidance as to the periods in which companies should recognizerevenues.

In addition, SAB 101 also highlights factors to be considered when determiningwhether to recognize revenues on a gross or net basis. SAB 101, as amended by SAB 101/A and SAB 101/B, is effective beginning no later than the fourth fiscal quarter of the fiscal year beginning after December 15, 1999. The Company believesthat its policies with regard to the recognition of revenues are in compliance withthe guidance of SAB 101.

O Research and Development

Significant costs are incurred each year in connection with research and develop-ment and engineering programs that are expected to contribute profits to futureoperations. Such costs are charged to income as incurred.

O Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with an originalmaturity of three months or less to be cash equivalents.

O Accounts Receivable

Invoices for goods sold are mainly stated in Euro. Allowances are recorded formanagement’s estimate of the likely uncollectible amounts.

O Inventories

Inventories are generally valued at the lower of cost or market. Raw materials andsupplies including spare parts are valued at average cost. A full cost absorption method

72

is employed using standard cost techniques for the costing of work-in process. Thestandards are reviewed and adjusted annually. Potential losses from obsolete andslow-moving inventories are provided for in the current period.

O Property, Plant and Equipment

Property, plant and equipment are recorded at acquisition cost. For financial re-porting purposes depreciation is provided on a straight-line basis over the estimateduseful lives of the assets.

Useful lives have been estimated as follows:● Machinery and equipment: 2 to 10 years ● Other equipment, factory and office equipment: 1 to 4 years

Gains or losses on sale or retirement of assets are included in income.

Please refer to the attached fixed assets movement schedule for details.

O Intangible Assets

Acquired intangible assets are stated at acquisition cost, less amortization on astraight-line basis over its estimated useful life (3 years for EDP software). In additionintangible pension assets as calculated and recorded under SFAS 87, “Employers’accounting for pensions”, are included in intangible assets.

O Warranty Accruals

Warranty costs are provided for when the related revenue is recognized based on the estimated costs of fulfilling the warranty obligation, including handling andtransportation costs.

O Pension Accruals and Other Accruals

The valuation of pension accruals is based upon the projected unit credit methodin accordance with SFAS 87. An other accrual is recorded when an obligation to athird party has been incurred, the payment is probable and the amount can be rea-sonably estimated.

Consolidated Report 2001

Notes

73

O Leases

The Company is a lessee of property, plant and equipment and a lessor of equipment(replication lines). All leases that meet certain specified criteria intended to representsituations where the substantive risks and rewards of ownership have been transferredto the lessee are accounted for as capital leases. All other leases are accounted for asoperating leases.

Equipment under operating leases, where the Company is the lessor, is valued atproduction costs and depreciated over its estimated useful live of 5 years using thestraight-line method. Related lease income is recorded when earned on a straight-linebasis.

O Impairment of Long-lived Assets

The Company applies the provisions of SFAS 121, “Accounting for the Impairmentof Long-Lived Assets and for Long-Lived Assets to be disposed of”. In accordance withthis statement the Company reviews long-lived assets for impairment whenever anevent or changes in circumstances indicate that the carrying amount of such assetsmay not be recoverable. The carrying values of long-lived assets are assessed for re-coverability by reference to the estimated future undiscounted cash flows associatedwith them. Where this assessment indicates a deficit, the assets are written down totheir fair market value. For assets which do not have a readily determinable fair marketvalue, the assets are written down to their estimated market value calculated by reference to the estimated future discounted cash flows.

O Deferred Taxes

Deferred taxes are accounted for under the asset and liability method. Deferredtax assets and liabilities are recognized for the future tax consequences attributableto differences between the financial statement carrying amounts of existing assetsand liabilities and their respective tax bases and for operating losses and carry for-wards. Deferred tax assets and liabilities are measured using enacted tax rates expectedto apply to taxable income in the years in which those temporary differences areexpected to be recovered or settled. The effect on deferred tax assets and liabilitiesof a change in tax rates is recognized in income in the period that includes theenactment date.

74

O Stock Based Compensation

The Company has issued convertible bonds to management and certain other em-ployees which are accounted for in accordance with Accounting Principles Board (APB)Opinion No 25, “Accounting for Stock Issued to Employees”. Following the provisionsof SFAS 123, “Accounting for Stock based Compensation”, the required additionaldisclosures are given in the notes to the consolidated financial statements.

O Comprehensive Income

The Company adopted SFAS 130, Reporting Comprehensive Income. SFAS 130establishes standards for the reporting and presentation of comprehensive incomeand its components in a full set of financial statements.

Comprehensive income of the Company consists of net income and currency trans-lation adjustment, as presented on the face of the consolidated income statement.SFAS 130 requires only additional disclosures in the consolidated financial statements;it does not affect the Company’s financial position or results of operations.

O Earnings per Share

Basic earnings per share are computed by dividing net income by the weightedaverage number of common shares outstanding. Diluted earnings per share are com-puted by dividing net income applicable to common shareholders by the weightedaverage number of common and common equivalent shares outstanding.

O Derivative Financial Instruments

The Company uses foreign currency forward contracts as a means of hedgingexposure to foreign currency risks for accounts receivable. The Company and its subsidiaries are end-users and do not utilize these instruments for speculative purposes. The Company has strict policies regarding financial stability and the credit worthiness of its counter parties.

In June 1998, the Financial Accounting Standards Board issued Statement ofFinancial Accounting Standards (SFAS) 133, Accounting for Derivative Instrumentsand Hedging Activities. SFAS 133 establishes accounting and reporting standardsrequiring that every derivative instrument (including certain derivative instrumentsembedded in other contracts) be recorded on the balance sheet as either an asset or

Consolidated Report 2001

Notes

75

liability measured at its fair value. The statement requires that changes in the deriva-tive’s fair value be recognized currently in earnings unless specific accounting criteriaare met.

If a derivative instrument qualifies for hedge accounting, the gains or losses fromthe derivative may offset results from the hedged item in the statement of operationsor other comprehensive income, depending on the type of hedge. To qualify for hedgeaccounting, a company must formally document, designate and assess the effectivenessof transactions that are to receive hedge accounting.

In June 2000, the Financial Accounting Standards Board issued SFAS 138, Account-ing for Certain Derivative Instruments and Certain Hedging Activities. This Statementaddresses a limited number of issues causing implementation difficulties for numerousentities that apply SFAS 133 and this Statement amends the accounting and reportingstandards of SFAS 133 for certain derivative instruments and certain hedging activities.

SFAS 137 delayed the effective date of SFAS 133 to fiscal years beginning afterJune 15, 2000. A company may implement the statements as of the beginning of anyfiscal quarter after issuance; however, SFAS 133 cannot be applied retroactively.

Effective January 1, 2001, the Company adopted SFAS 133 as amended by SFAS 137and SFAS 138. The adoption did not have a material impact on the financial positionor the results of operations of the Company.

As of December 31, 2001, the company had foreign currency forward contractsamounting to USD 3.6 million in order to hedge foreign currency risks relating totrade accounts receivable. Those derivative transactions, while providing effectiveeconomic hedges under the Company’s risk management policies, do not qualify forhedge accounting under the rules of SFAS 133. Changes in the fair value of anyderivative instruments that do not qualify for hedge accounting under SFAS 133, are recognized in other operating income or expenses. Therefore, a loss of KEUR 91 in respect to those contracts has been recorded.

O Concentration of Credit Risk

The Company provides services to a wide range of clients who operate in manyindustry sectors in varied geographic areas. The Company grants credit to all qualifiedclients and does not believe that it is exposed to undue concentration of credit riskto any significant degree.

76

O New Pronouncements

In August 2001, the Financial Accounting Standards Board (FASB) issued SFAS 144,“Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS 144 estab-lishes a single accounting model for long-lived assets to be disposed of by sale consistent with the provisions of SFAS 121 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of.” Whilst it supersedes APBOpinion 30 “Reporting the Results of operations - Reporting the Effects of Disposalof a Segment of a Business, and Extraordinary, Unusual and Infrequently OccurringEvents and Transactions,” it retains the presentation of discontinued operations butbroadens that presentation to include a component of an entity – rather than a segment of a business. However, discontinued operations are no longer recorded asrecognized before they occur. Under SFAS 144 there is no longer a requirement toallocate goodwill to long-lived assets to be tested for impairment. SFAS 144 alsoestablished criteria for determining when an asset should be treated as held for sale.

SFAS 144 is effective for fiscal years beginning after December, 15, 2001 and inter-im period within those fiscal years, with early application encouraged. The provisionsof the Statement are generally to be applied prospectively. The Company currentlyhas no plans to dispose of any operations and accordingly does not anticipate thatadoption of SFAS 144 will have material impact on its results of operations or itsfinancial position.

In June 2001, the Financial Accounting Standards Board (FASB) issued Statementof Financial Accounting Standards (SFAS) 143, “Accounting for Asset RetirementObligations.” SFAS 143 requires that the fair value of a liability for an asset retirementobligation be recognized in the period in which it is incurred if a reasonable estimateof fair value can be made. The associated asset retirement costs are capitalized aspart of the carrying amount of the long-lived asset. An entity shall measure changesin the liability for an asset retirement obligation due to passage of time by applyingan interest method of allocation to the amount of the liability at the beginning ofthe period. The interest rate used to measure that change shall be the credit-adjustedrisk-free rate that existed when the liability was initially measured. That amount shallbe recognized as an increase in the carrying amount of the liability and as an expenseclassified as an operating item in the statement of income. SFAS 143 is effective forfiscal years beginning after June 15, 2002. The Company does not anticipate thatadoption of SFAS 143 will have a material impact on its results of operations or itsfinancial position.

Consolidated Report 2001

Notes

77

In July 2001, the Financial Accounting Standards Board issued SFAS 141, “BusinessCombinations,” and 142 “Goodwill and Other Intangible Assets.” SFAS 141 requires theuse of the purchase method of accounting for all business combinations initiated afterJune 30, 2001. Intangible assets are to be recognized if they arise from contractualor legal rights or are “separable”, i.e. it is feasible that they may be sold, transferred,licensed, rented, exchanged, or pledged. As a result, it is likely that more intangibleassets will be recognized under SFAS 141 than its predecessor, APB Opinion 16,although in some instances, previously recognized intangibles will be subsumed intogoodwill.

Under SFAS 142, goodwill will no longer be amortized on a straight-line basis overits estimated useful life, but will be tested for impairment at least annually. The good-will impairment test, which is based on fair value, is to be performed on a reportingunit level. A reporting unit is defined as a SFAS 131 operating segment or one levellower. Goodwill will no longer be allocated to other long-lived assets for impairmenttesting under SFAS 121, “Accounting for the Impairment of Long-Lived Assets and forLong-Lived Assets to be Disposed of.” Under SFAS 142, intangible assets with indefinitelives will not be amortized. Instead, they will be carried at the lower of cost or marketvalue and tested for impairment at least annually. All other recognized intangibleassets will continue to be amortized over their estimated useful lives.

SFAS 142 is effective for fiscal years beginning after December 15, 2001 althoughgoodwill on business combinations consummated after June 30, 2001 will not beamortized.

The adoption of these statements does not have a material impact on the financialposition or the results of operations of the Company.

78

Consolidated Report 2001

Notes

O Note 5 – Inventories

Inventories consist of the following:

2001 2000

KEUR KEUR

Raw materials and packing materials 25,688 35,917

Work-in process and finished goods 37,449 47,960

Prepayments to suppliers 1,067 3,229

Less – inventory reserve (7,503) (4,006)

56,701 83,100

Other receivables

2001 2000

KEUR KEUR

Tax refunds 3,054 2,504

Accrued interest income 100 281

Others 1,110 1,210

4,264 3,995

O Note 4 – Accounts Receivable

2001 2000

KEUR KEUR

Trade accounts receivable 65,851 59,913

Less – allowance for doubtful accounts (4,637) (2,166)

61,214 57,747

Trade accounts receivable

79

O Note 6 – Liabilities

Other current liabilities

2001 2000

KEUR KEUR

Accruals for invoices not yet received 2,636 3,324

Commissions 1,971 1,618

Liabilities for employee’s compensation to future absence 1,081 1,123

Outstanding credit notes to customers 876 0

Liabilities for social security insurance 766 749

Annual bonus 479 2,365

Shareholder’s meeting/annual report liabilities 445 256

Year-end closing liabilities 386 237

Tax liabilities 239 325

Current portion of convertible bonds 186 53

Other liabilities to employees 0 744

Other 892 1,808

9,957 12,602

The progress payments at December 31, 2001 and 2000, represent the advancepayments received from customers mainly for replication lines included in the work-in process.

The decrease is mainly due to the fact that orders for replication lines are belowprior year’s volume.

2001 2000

KEUR KEUR

Advanced payments received from customers 8,427 14,535

Progress payments

80

Consolidated Report 2001

Notes

The convertible bonds have been issued according to a management share optionplan. This was created for members of the management board and other importantemployees of the Company in order to motivate the respective subscribers to ensurethe success of the Company. The conditional capital increase necessary for the issueof the convertible bonds was agreed upon by the extraordinary general shareholders’meeting on November 6, 1997, the ordinary shareholders’ meeting on May 7, 1999and the ordinary shareholders’ meeting on May 7, 2001. According to the shareholders’resolutions, the management board is authorized to issue interest-bearing convertiblebonds in one or more steps with an aggregate nominal value of up to Euro 3,397,104and a maturity up to December 31, 2010, subject to the consent of the supervisoryboard.

In November 30, 1997 convertible bonds with a nominal amount aggregating toKEUR 383 with an interest rate of 6 % p.a. were issued. Each DM 5 (Euro 2.56) nominalvalue of convertible bonds may be converted to six ordinary bearer share with anominal value of Euro 1. The conversion rate was fixed to the initial offer price ofDM 82 (Euro 41.93) per share with a nominal value of 5 DM. In 1998 and 1999 convertible bonds equivalent to KEUR 38 were returned by employees who have leftthe company. 53,554 of the convertible bonds with a total nominal value of KEUR 137have been converted in 1999 and 2000 and 19,188 convertible bonds with a totalnominal value of KEUR 49 have been converted in 2001. A further 7.5 % may be converted on each conversion date thereafter. Conversion dates are May 31 andNovember 30 of each calendar year up to 2005. On December 31, 2001 the aggre-gated nominal value of the outstanding convertible bonds of this tranche amounts to KEUR 160.

Convertible bonds issued in 2000 with an aggregated nominal value of KEUR 494were issued at nominal value with an interest rate of 6 % p.a. Each Euro 1 nominalvalue of convertible bonds may be converted to two ordinary bearer share with a

2001 2000

KEUR KEUR

Long-term portion of convertible bonds 1,179 569

O Long-term Loans

Long-term loans include only convertible bonds held by management and certainother employees.

81

nominal value of Euro 1. Convertible bonds equivalent to KEUR 81 have been returnedin 2000 by employees who have left the company. In 2000 and 2001 these convertiblebonds have been given to new employees. The conversion rate for convertible bondswith an aggregate nominal value of KEUR 373 was fixed to the share price as ofDecember 21, 1999 (Euro 29.73 per share, considering a 2 for 1 stock split after theissuance of the convertible bonds) with a nominal value of 1 Euro. The conversionrate for convertible bonds with an aggregate nominal value of KEUR 81 was fixed tothe share price as of November 30, 2000 (Euro 37.50 per share). The conversion ratefor the remaining convertible bonds with an aggregate nominal value of KEUR 40 wasfixed to the share price as of January 31, 2000 (Euro 42.25 per share, considering a 2 for 1 stock split after the issuance of the convertible bonds). 25 % of the convertiblebonds may be converted on May 31, 2002 and a further 7.5 % may be converted oneach conversion date thereafter. Conversion dates are May 31 and November 30 ofeach calendar year up to 2007. On December 31, 2001 the aggregated nominal valueof the outstanding convertible bonds of this tranche amounts to KEUR 494.

In 2001 convertible bonds with an aggregated nominal value of KEUR 711 wereissued at nominal value with an interest rate of 4 % p.a. Each Euro 1 nominal valueof convertible bonds may be converted to one ordinary bearer share with a nominalvalue of Euro 1. The conversion rate for these convertible bonds was fixed to Euro 32.53equaling 130 percent of the average share price of the period from May 14 to May 18, 2001 (Euro 25.02 per share). 25 % of the convertible bonds may be con-verted at May 31, 2003 and a further 15 % may be converted on each conversiondate thereafter. Conversion dates are May 31 and November 30 of each calendar year up to 2008. On December 31, 2001 the aggregated nominal value of the out-standing convertible bonds of this tranche amounts to KEUR 711.

82

Consolidated Report 2001

Notes

As of December 31, 2001 the aggregate nominal value of all three tranches of theconvertible bonds amounts to KEUR 1,365. Based on the conversion date, the valueat maturity of the bonds is as follows:

According to the above table, the current portion of the convertible bonds duewithin one year amounts to KEUR 186 and therefore is stated under “Other currentliabilities”.

Compensation expenses are calculated and recorded for stock option plans thatqualify as variable plans under APB No. 25. In fiscal year 2001 the Company did notrecord compensation expenses in relation to the stock option plans and reversed prioryear’s compensation expense of KEUR 176, since the performance conditions as definedwere not met as of December 31, 2001.

Using an option pricing model in accordance with SFAS 123, the weighted-averagefair value of the options amounts to approximately KEUR 20,970, based on a volatilityrate of 64.03 % and assuming a risk-free rate of 4.4 %. If the company had adoptedSFAS 123 net income for the year 2001 would have been KEUR 23.737 and earningsper share would have been Euro 0.65 (basic) and Euro 0.63 (diluted) respectively.

O Note 7 – Employee Benefit Plans

In Germany, the Company sponsors a pension plan covering all employees who weretaken over from LEYBOLD AG, the employees who were hired by LEYBOLD AG on behalfof the Company as well as the members of the board of directors. The pension plan isbased on the benefit plan of LEYBOLD AG established in 1969 and the amendmentshereto as of 1977, 1986 and 2001.

KEUR

Due in 2002 186

Due in 2003 425

Due in 2004 339

Due in 2005 292

Due in 2006 74

Due in 2007 43

Due in 2008 6

1,365

83

Consistent with German practice, the pension plan is not funded. Pension costs arerecorded based on independent actuarial valuations. Pension benefits under Germanplans are generally based on a percentage of the employees’ compensation for eachyear of credited service.

The table that follows contains a reconciliation of the changes in the benefit obli-gation and the funded status for the respective reporting periods:

2001 2000

KEUR KEUR

Projected benefit obligation, beginning balance 1,638 1,473

Service cost 102 87

Interest cost 102 92

Amendments 313 0

Actuarial (gain)/loss 567 (14)

Projected benefit obligation, ending balance 2,722 1,638

Funded status (2,723) (1,638)

Unrecognized net (gain)/ or loss 494 (73)

Unrecognized prior service cost 254 0

Net amount recognized (1,975) (1,711)

Change in projected benefit obligation:

Principal weighted assumptions used in determining projected benefit obligationare as follows:

Amounts recognized in the consolidated balance sheet consist of:

2001 2000

KEUR KEUR

Accrued pension liability (2,183) (1,711)

Intangible assets 208 0

(1,975) (1,711)

2001 2000

Discount rate 6.00 % 6.25 %

Salary increase 3.30 % 3.25 %

Pension payment increase 2.00 % 1.75 %

84

Consolidated Report 2001

Notes

O Note 8 – Other accruals

The components of net periodic pension cost were as follows:

2001 2000

KEUR KEUR

Service cost 102 86

Interest cost 102 92

Amortization of prior service cost 60 0

264 178

2001 2000

KEUR KEUR

Warranty accruals 5,240 8,577

Contingent losses 2,600 0

Buy-Back obligations 2,190 0

Other 701 69

10,731 8,646

Other accruals include the following:

Warranty accruals are determined based on the estimated costs of fulfilling thewarranty obligation, including handling and transportation costs and calculated as apercentage of sales (2 % for all sales and 6 % for prototypes) based on experiences.

In prior year buy-back obligations have been included in other current liabilities.

O Note 9 – Shareholders’ Equity

O Share Capital

The share capital increased by KEUR 115 due to the conversion of convertible bondswhen 115,128 new bearer shares were issued. At December 31, 2001, the share capitalof the Company amounts to KEUR 36,436 and consists of 36,436,440 bearer shares,with a nominal value of Euro 1 each. All shares are paid up. Each share is entitled to one vote. All shares are admitted to the official market [Geregelter Markt] withtrading on the New Market [Neuer Markt], a market segment of the Frankfurter StockExchange [Deutsche Börse Frankfurt].

85

O Conditional Capital

The management board is authorized to issue, in one or more steps, interest-bearing convertible bonds equivalent to KEUR 3,397 shares of Euro 1 each with amaturity up to December 31, 2010, subject to the consent of the supervisory board(conditional capital). On November 30, 1997, a nominal amount, aggregating toKEUR 383 of the conditional capital, was converted to convertible bonds following a share management option plan. In 2000, a nominal amount, aggregating toKEUR 494 of the conditional capital, was converted to convertible bonds according to an additional share management option plan. In 2001 a further nominal amountaggregating to KEUR 711 of the conditional capital was converted to convertiblebonds. The long-term portion of the convertible bonds are stated under “Long-termliabilities”, the current portion due within one year is stated under “Other current liabilities”. We further refer to the comments under Note 6 – Liabilities.

O Authorized Capital

The management board is authorized to increase the Company’s share capital withthe consent of the supervisory board, in one or more steps, until September 30, 2002,by an aggregate nominal amount of up to KEUR 6,136 by issuing new bearer shareswith a nominal value of Euro 1 each, against contribution in cash or in kind (authorizedcapital 1). Furthermore, the management board is authorized to increase the Company’sshare capital, in one or more steps, until September 30, 2002 by an aggregate nominalamount of up to KEUR 1,534 by issuing new bearer shares with a nominal value ofEuro 1 each, against contribution in cash or in kind (authorized capital 2). For bothauthorized capital amounts the pre-emptive rights may, with consent of the supervisoryboard, be excluded under certain conditions.

O Additional Paid-in Capital

The additional paid-in capital increased in 2001 by KEUR 689 and in prior years byKEUR 2,025 due to the conversion of convertible bonds. In connection with the issuanceof stock options, the Company recorded in 2000 compensation expenses in accordancewith APB No. 25 amounting to KEUR 176 and an increase in additional paid-in capital,respectively. In 2001 these entries have been reversed since the performance conditionsas defined were not met as of December 31, 2001.

86

Consolidated Report 2001

Notes

O Note 10 - Leases and Rentals

As of December 31, 2001, minimum annual rental payments for rental commit-ments were as follows:

Rental expenses for these operating leases were KEUR 1,103 for 2001 and KEUR 997for 2000.

2001

TEUR

2002 1,103

2003 1,103

2004 1,103

2005 1,103

2006 1,103

2007 and thereafter 12,684

18,199

O Note 11 - Interest Income/-expenses

Interest income consists of the following:

2001 2000

KEUR KEUR

Interest income from financial investments 821 2,353

Other interest expenses/income 1,400 (1,047)

2,221 1,306

O Dividend Payments

Dividends may only be declared and paid from distributable shareholders equity as shown in the Company’s annual statutory unconsolidated accounts. As ofDecember 31, 2001, the Company’s German statutory unconsolidated accounts state revenue reserves of KEUR 51,852 and retained earnings of KEUR 14,467.

87

O Note 12 - Income Taxes

Based on a guideline for the interpretation of the revised sec. 8 para 4 of theCorporation Income Tax Act on the usage of tax loss carry forwards issued by theGerman tax authorities, the usage of tax loss carry forwards may be limited. Thispaper presents the interpretation of the tax authorities but does not represent lawand may eventually be either confirmed or abolished by the Federal Tax Court. In thisopinion the tax authorities state that tax loss carry forwards acquired in connectionwith a change in ownership of a corporation of more than 50 % of the shares can-not be used against future income if predominantly new assets are supplied in thefollowing five years. Based on this paper, the usage of such tax losses could be dis-allowed in the case of SINGULUS TECHNOLOGIES AG from fiscal year 1997 onwards.

If this interpretation would succeed in a court case a tax risk with respect to therealization of such tax loss carry forwards for fiscal year 1997 in the amount of up to4.6 million Euro exists. However, legal proceedings are pending before the a federalcourt (Bundesverfassungsgericht) with regard to the formal unconstitutionality ofSec. 12 (2) UmwStG (Reorganization Tax Law) due to failure to comply with the legis-lative procedure. As the legislative procedure for Sec. 8 (4) KStG (Corporate IncomeTax Act) has the same defects, it is possible that this regulation is formally unconstitu-tional too. At present, the outcome of this discussion is uncertain and cannot be finallyevaluated. Accordingly, no accrual has been set up for this matter in the financialstatements 1997, 1998, 1999, 2000 and 2001.

Beside this contingency, the tax accruals (2001: KEUR 5,284; 2000: KEUR 29,855)include a provision for income taxes in an amount of KEUR 5,113, as the acceptanceof the realization of corporate income tax loss carry forwards in prior years by thetax authorities is subject to a final assessment.

88

Consolidated Report 2001

Notes

Under German corporate tax law, taxes on income are composed of corporate taxes,trade taxes and solidarity surcharge. Deferred income taxes are established for allsignificant temporary differences between the amount of assets and liabilities recognized for financial reporting purposes and for tax purposes.

Current income tax:

2001 2000

KEUR KEUR

Germany

Corporate income tax 7,321 30,080

Trade tax 4,108 11,448

Foreign

Income tax 3,585 5,293

15,014 46,821

Deferred income tax:

2001 2000

KEUR KEUR

Germany: (276) (886)

Foreign (225) 134

Total income tax 14,513 46,069

Income tax data from continuing operations for the year ended December 31,2001 and 2000, is as follows:

Pretax income:

2001 2000

KEUR KEUR

Germany 45,305 79,289

Foreign 10,374 16,427

55,679 95,716

Consolidation adjustments (13,231) (992)

42,448 94,724

89

The German statutory tax rate (for income tax, trade tax on income and solidaritysurcharge) was approximately 36.0 % for the year ended December 31, 2001, and50.4 % for the year ended December 31, 2000. The reconciliation between the statutorytax rates for income taxes and the effective tax rate is as follows:

O Note 13 - Contingent Liabilities

Contingent liabilities not recognized on the consolidated balance sheets amount toTEUR 38,702 and represent buy-back guarantees given to leasing institutions relatedto sales of replication lines. However, in case of claims under those guarantees theCompany has the right to resell the replication lines bought back.

Management is not aware of any other matters that could give rise to any otherliabilities to the Company that would have a material adverse effect on the Company’sbusiness, financial condition or results of operation.

O Note 14 - Segment Reporting

The product groups of the Company are similar with regard to both productionprocesses as well as marketing methods and markets. Hence, they are not considered

Deferred tax assets, for which no valuation allowances have been provided,include the following:

2001 2000

KEUR KEUR

Temporary differences 4,355 3,230

Consolidation adjustments 675 624

5,030 3,854

2001 2000

KEUR KEUR

Statutory tax rate 36.0 % 50.4 %

Differences in foreign tax rates -1.4 % -3.0%

Non tax deductible items (Germany) 0.2 % 1.6%

Non tax deductible consolidation adjustments -0.6 % -0.4%

Effective tax rate 34.2 % 48.6%

90

Notes

Consolidated Report 2001

as separate industry segments and do not require individual financial reporting forsegments.

However the operations of SINGULUS EMOULD GmbH are different from the restof the Company, but have not been deemed to be separate reportable operating seg-ments since the quantitative thresholds for reportable segments as defined in SFAS131 have not been met.

Revenue by product group

2001 2000

TEUR TEUR

Prerecorded CDs/DVDs 169,300 309,015

Recordable CDs 21,441 36,717

Service and other 34,784 29,990

225,525 375,722

Geographic information as of December 31, 2001

Rest ofGermany Europe America Asia

TEUR TEUR TEUR TEUR

Gross revenue by Country of origin 210,781 3,619 5,749 5,376

Destination 15,643 59,603 51,724 98,555

Geographic information as of December 31, 2001

Rest ofGermany Europe America Asia

TEUR TEUR TEUR TEUR

Gross revenue byCountry of origin 365,035 2,112 5,645 2,930

Destination 29,748 72,415 79,075 194,483

91

O Note 15 - Subsequent Events

Effective January 1, 2002, the Company acquired all shares of Optical Measuring-Equipment & Projects B.V., Best, Niederlande, (OMP), a manufacturer of digital mastering systems. The provisional purchase price for this acquisition amounts toKEUR 22,689. 50 % of the purchase price have been paid in cash. The remaining 50 % will be paid in 379,110 newly issued shares of Singulus. The final purchase price will be calculated based on the average net income for the period from 1999 to 2001.

According to international standards our report is concentrated on SINGULUS TECHNOLOGIES group.

On the following pages you will find the balance sheets and the income statement of thelegal entity SINGULUS TECHNOLOGIES AG in prepared conformity with German accountingprinicples and translated into English.

The complete German report (HGB) is available on request:

SINGULUS TECHNOLOGIES AG

Hanauer Landstraße 103D-63796 Kahl

Tel.: +49-6188-440-0Fax: +49-6188-440-110

Internet: www.singulus.deemail: investor-relations@singulus.de

Annual Report 2001 HGB

Annual Report 2001 HGB

92

Balance Sheets

Dec. 31, 2001 Dec. 31, 2000

EUR EUR

Fixed assets

Intangible assets

Franchises, industrial Trademarks andsimilar rights and values, as well aslincences thereto 722,321.16 1,053,288.25

Property, plant and equipment

Estates, similiar rights and buildingson foreign estates 16,253,843.39 16,806,671.49

Technical equipment, plant and machinery 415,873.66 476,429.77

Other equipment, operational and officeequipment 1,846,997.98 2,021,261.68

Prepayments to suppliers 0.00 89,476.08

18,516,715.03 19,393,839.02

Equipment under operating leases 2,981,000.00 0.00

Financial assets

Shares in affiliated companies 3,229,123.71 766,338.98

Loans to affiliated companies 9,967,187.09 0.00

13,196,310.80 766,338.98

Total fixed assets 35,416,346.99 21,213,466.24

Current assets

Total inventories

Raw and packing materials 16,249,989.38 29,568,970.19

Work-in-process and finished goods 29,124,638.85 47,959,541.03

Prepayments to suppliers 1,066,910.08 3,234,639.62

Progress payments received -8,154,535.55 -14,534,986.01

38,287,002.76 66,228,164.83

Total accounts receivable

Trade accounts receivable 50,484,381.44 54,517,648.66

Accounts due from affiliated companies 578,823.34 752,366.02

Other assets 6,146,913.94 3,419,295.88

57,210,118.72 58,689,310.56

Checks, cash on hand and in Federal Bank andin postal giro accounts, and cash in banks 43,400,093.14 39,260,735.92

Total current assets 138,897,214.62 164,178,211.31

Deferred charges and prepaid expenses 12,306.39 24,670.53

Total assets 174,325,868.00 185,416,348.08

Balance sheet as of December 31, 2001 und 2000Assets

93

Dec. 31, 2001 Dec. 31, 2000

EUR EUR

Shareholders’ equity

Share capital 36,436,440.00 36,321,312.00

Add. Paid-in capital 15,196,798.99 14,508,037.06

Other earnings reserve 51,851,673.83 18,843,574.63

Retained earnings – ending 14,466,714.70 18,541,384.50

Total shareholders‘ equity 117,951,627.52 88,214,308.19

Provisions

Pension accruals and reserves for similarobligations 2,182,601.00 1,711,016.81

Tax accruals 5,126,450.52 27,014,796.13

Other provisions 16,146,369.66 16,182,546.63

Total provisions 23,455,421.18 44,908,359.57

Liabilities

Long-term loans 1,365,044.07 622,097.42

Liabilities against Creditinstitutions 46,153.06 27,077.59

Trade accounts payable 10,903,701.80 24,348,555.47

Accounts due to affiliated companies 5,177,695.30 10,864,118.27

Other liabilities 15,426,225.07 16,431,831.57

– thereof for taxes EUR 210,994.71(prior year EUR 324,467.83)

– thereof for social security EUR 719,338.72 (prior year EUR 748,672.93)

Total liabilities 32,918,819.30 52,293,680.32

Total liabilities and shareholders’ equity 174,325,868.00 185,416,348.08

Balance sheet as of December 31, 2001 und 2000Liabilities

Annual Report 2001 HGB

94

Income Statements

Income statement for the business years 2001 and 2000

Dec. 31, 2001 Dec. 31, 2000

EUR EUR

Gross revenues 214,630,163.17 373,671,361.76

Increase (decrease) in finished goodsand work-in-process -18,834,902.18 21,199,433.86

Other capitelized production assets 3,645,000.00

Other operating income 4,514,205.16 1,948,826.91

Cost of materials

Cost of raw materials, supplies and benefit costs -112,035,543.71 -230,736,988.79

Personnel expenses

Wages and salaries -13,495,831.77 -17,996,533.83

Social security, pension and other benefit costs -2,511,561.36 -2,231,441.65

– thereof for pensions plan EUR 474,518.73 (prior year EUR 179,778.96)

Depreciation on intangible assetsand plant and equipment -2,430,470.62 -1,806,979.59

Other operating expenses -44,256,286.06 -66,722,500.38

Income from affiliated companies 9,837,542.03 359,311.88

– thereof from affiliated companies EUR 9,837,542.03 (prior year EUR 359,311.88)

Other interest and similar income 2,845,756.87 2,282,782.29

- thereof from affiliated companiesEUR 33,829.44 (prior year EUR 3,621.10)

Write-off financial assets and marketable securities -3,369.70 -62.89

Interest and similar expenses -1,365,722.40 -834,843.60

– thereof from affiliated companiesEUR 0.00 (prior year EUR 0.00)

Operating income 40,538,979.43 79,132,365.97

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Income statement for the business years 2001 and 2000

Dec. 31, 2001 Dec. 31, 2000

EUR EUR

Operating income 40,538,979.43 79,132,365.97

Other taxes -177,306.87 -10,673.06

Taxes on income -11,428,243.16 -42,038,923.90

Net income 28,933,429.40 37,082,769.00

Retained earnings at beginning of the year 18,541,384.50 0.00

Allocation to other earnings reserve -33,008,099.20 -18,541,384.50

Retained earnings at end of the year 14,466,714.70 18,541,384.50

Annual Report 2001 HGB

96

Miscellaneous

O Average Total Employment

In the fiscal year concluded, the annual average of permanent numbered 243. The annualaverage for the prior year was 208.

O Corporate Bodies of SINGULUS TECHNOLOGIES AG

The Supervisory Board consists of three members who are appointed at the GeneralShareholders’ Meeting. Supervisory Board members for the period under review are listedbelow:

Alexander von Engelhardt William Slee Thomas GeitnerKronberg (Taunus) London Köln

Chairman Vice Chairman

The appointment of the aforementioned Supervisory Board memebers is in effect throughthe General Shareholders´ Meeting at which time a discharge decision for fiscal 2001 will bemade.

In addition to reimbursement of expenses, Supervisory Board members are compensated20,000.00 Euro for each full business year of membership. The Chairman receives twice thisamount, the Vice Chairman, one and one-half times this amount.

The current occupations of Supervisory Board members are listed below along with anyadditional supervisory board positions held, i.e. membership in comparable regulatory bodies:

Professions Further memberships in Supervisory Boards andother bodies

Alexander v. Engelhardt Supervisory Board • Gütermann AG (Chairman)

• Dr. Schmidt AG & Co.(Vice Chairman)

• K.u.M. Möbel AG, Kirchlengern(Vice Chairman)

• SAI Automotive AG

• Tarkett Sommer AG

• Comline AG

97

William Slee Supervisory Board • Electronics Boutique Plc.,Great Britain,(Non executive Director)

• Virtual Internet plc., Great Britain,(Chairman)

• Algemeen Burgerlijk Pensioenfonds (Member of Investment Komitees)

• Charles Vögele Holding AG(Member of Supervisory Board)

Thomas Geitner Executive Director • Vodafone D2 GmbH, Düsseldorf

(Vodafone Group plc.) • Arcor AG & Co., Eschborn (Chairman)

• Vodafone Libertel N.V., Maastricht

• Omnitel Pronto Italia, S.p.A.

• Vodafone TeleCommerce GmbH,Düsseldorf (Chairman)

Members of the company´s management board for fiscal year 2001 were:Roland Lacher (Chairman), Reiner Seiler, Dr. Christian Holtmann

Kahl, February 27, 2002

The Managing Board

R. Lacher R. Seiler Dr. C. Holtmann

Company management board compensation 2001

Fix* Variable Total

Roland Lacher 240,791 58,165 298,956

Reiner Seiler 163,944 58,165 222,109

Dr. Christian Holtmann 162,137 58,165 220,302

Total 566,872 174,495 741,367* Basic salery plus benefits as well as monetary equivalents

Glossary of Technical Terms

98

Blue-Ray Disc New standard for optical storage medium with 27 G byte storage capacity.

Bonding Permanent adhesion of two discs halves to each other, one of the DVD production steps.

CD Compact Disc; optical medium for storage of digital prerecorded infor-mation. During the injection moulding process information is embedded in permanent microscopic pits on the CD surface. This information can only be read and not altered (audio, video computer); 650 megabyte storage capacity; 780 nanometer laser wavelength; one polycarbonate substrate (120 mm diameter; 1,2 mm thickness).

CD-ROM Compact Disc - Read Only Memory; optical data storage medium for pre-recorded data (software). This information can only be read and not altered.

CD-R Compact Disc - Recordable; optical data storage medium for personal archiving (burning) of digital information; the CD-R can be recorded onlyonce, and thereafter can only be read like a CD-ROM.

CD-RW Compact Disc - Rewritable; optical data storage medium for archiving (burning) of digital information; the CD-RW can be recorded and erased repeatedly.

CD-View Card Rectangular-shaped CD-ROM the size of a credit card which can be read using a conventional CD-ROM drive; usually 60 MB storage capacity.

DVD Digital Versatile Disc; optical medium for the storage of digital information(audio, video, computer data); 9.4 G byte max. storage capacity; 650 nano-meter laser wavelength; 2 polycarbonate substrates (10 mm diameter; 0.6 mm thickness each), individually produced, coated and subsequently bonded together. The digital information can be read but not altered.

DVD-Audio Digital Versatile Disc-Audio; optical medium for the digital storage of music.

DVD-ROM Digital Versatile Disc-ROM; optical medium for the storage of digital information (data, software, games, etc.); the digital information can be read but not altered.

DVD-Video Digital Versatile Disc-Video; optical medium for the storage of movies withmultiple supplemental features including language options.

DVD-R Digital Versatile Disc-Recordable; optical data storage medium for personalarchiving (burning) of digital information; the DVD-R can be recorded only once, and thereafter can only be read like a normal DVD.

DVD - 5 Digital Versatile Disc - 4.7 G byte storage capacity

DVD - 9 Digital Versatile Disc - 8.5 G byte storage capacity

DVD - 10 Digital Versatile Disc - 9.4 G byte storage capacity

DVD-RW Digital Versatile Disc - Rewritable; optical data storage medium for repeated digital recording for video applications. (Format of i.e. PIONEER).

99

DVD+RW Digital Versatile Disc - Rewritable; optical data storage medium for repeated digital recording for video applications. (Format of i.e. PHILIPS).

DVD-RAM Digital Versatile Disc - Read Access Memory; optical data storage mediumfor repeated digital recording for PC applications. (Format of i.e. HITACHI).

DVR Digital Versatile - Rewritable; new optical data storage medium still in the development stages, for repeated digital recording, approx. 20 G byte storage capacity.

Dye Special dye on CD-R and DVD-R discs onto which information is recorded in a CD burner.

Mastering The mastering process transfers digital data from music or video into pits.The result is disc master as basis for replication.

Metallizing Application of a thin layer of metal (aluminum, gold, silver) or silicon ontoa CD or DVD disc; this reflective layer serves to reflect the laser beam; the cathode technology employed is called sputtering.

MODULUS Multiple cathode metallizer for coating rewritable CD-RW, DVD-RW, DVD+RW and DVD-RAM media.

Moulding Injection moulding for production of disc.

Phase-Change Process in which the composition of a material is converted from an Technology amorphous into a crystalline state and back again.

Polycarbonate CD and DVD substrate material.

SKYLINE Fully automatic replication line for CD, CD-ROM and CD business cards.

SKYLINE Duplex Fully automatic replication line for CD and DVD 5.

SMART CATHODE® Patented sputter cathode for coating CD and DVD discs with highly uniform reflective layers.

SONY Playstation 2 DVD game console made by SONY; uses CD-ROM and DVD-ROM storage media for the games.

SPACELINE Fully automatic replication line for DVD 5, DVD 10 and DVD 9.

SPACEBonder Bonding system for DVD.

Injection moulding Injection moulding machine for production of disc.machine

Sputtering The process by which a thin layer of metal or silicon is deposited onto a transparent polycarbonate disc.

Sputter-Cathode Sputtering device in a metallizer.

STREAMLINE Fully automatic replication line for CD-R.

STREAMLINE Duplex Fully automatic replication line for DVD-R.

SUNLINE Fully automatic replication line for rewritable CD-RW, DVD-RW, DVD+RW and DVD-RAM dics.

Glossary of Technical Terms

100

Uniformity Even distribution of layers on a disc.

UV-curing Drying or curing of adhesives or lacquers with the aid of ultraviolet rays.

Target Metal plate which serves as the source of a selected layer material; ionicbombardment of its surface releases the material which subsequently coats the disc.

X-Box DVD game console made by MICROSOFT, DVD-ROM is the storage medium used for the games.

101

Company Calendar

Imprint

Published bySINGULUS TECHNOLOGIES AG, Kahl/Main

ProductionMetaCom Corporate Communications GmbH,Hanau

Conception and IdeaBernhard Krause

TextDr. André HülsböhmerSINGULUS TECHNOLOGIE AGBernhard Krause

ArtworkJens Gloger

DTPVisual Design

PhotographyViktor DieboldArchive SINGULUS TECHNOLOGIES AG

We thank the following companies for the picturerelinquishment: Deutsche Börse Frankfurt/Main,Tocano

PrintingBraun & Sohn, Dörnigheim

Printed on chlorine-free bleached paper

SINGULUS TECHNOLOGIES AG

Hanauer Landstrasse 103D-63796 Kahl

Tel.: +49-6188-440-0Fax: +49-6188-440-110

Internet: www.singulus.deemail: investor-relations@singulus.de

SINGULUS TECHNOLOGIES Company Calendar 2002

06.–08.05.02 Media-Tech Expo, Frankfurt/Main, Fair ground, Hall 8

08.05.02 Analyst Meeting, Frankfurt/Main

08.05.02 Quarterly Report 01/2002

27.05.02 Annual shareholders Meeting in Frankfurt/Main at 10:30 am,Deutsche Bank, Josef-Abs-Saal

05.08.02 Quarterly Report 02/2002

04.11.02 Quarterly Report 03/2002

Year 2003 (preliminary)

28.03.03 Quarterly Report 4/2002 and Annual Closingand DVFA-Meeting, Frankfurt/Main

SINGULUS TECHNOLOGIES AG

Hanauer Landstrasse 103

D - 63 796 Kahl

Fon +49 - 6188 - 440 - 0

Fax +49 - 6188 - 440 - 110

email investor-relations@singulus.de

www.singulus.de