ANNUAL REPORT 2002 - Singulus Technologies · 2016-01-04 · Deutsche Bank, Hermann-Josef-Abs Saal,...

1999 2000 2001 2002

KEUR KEUR KEUR KEUR

Gross Revenues 177,258 375,722 225,525 290,548

Profit bevore Tax 45,493 94,724 42,448 54,521

Net Income 23,781 48,655 27,935 36,589

Total Shareholders’ Equity 56,541 106,484 135,406 181,621

Balance Sheet Total 129,197 199,332 187,662 263,349

Operating-Cash-Flow 11,622 14,775 16,280 20,949

R & D Expenses 4,359 9,013 8,307 16,155

Staff* (31.12.) 212 319 367 502

DVFA/SG Earnings per Share (EUR) 0.66 1.35 0.77 1.01**

|| | || | ||| || | | | | | | | ||| || | | D I G I T A L C O D E | | ||| || | ||| || | || | || | || | || | ||| | |

> AT A G L A N C E

| || | ||| || | | | | | | | ||| || | | D I G I T A L C O D E | | ||| || | ||| || | || | || | || | || | ||| | |

SINGULUS TECHNOLOGIES AG

Hanauer Landstraße 103

D - 63 796 Kahl

Fon +49 - 6188 - 440 - 0

Fax +49 - 6188 - 440 -110

email [email protected]

www.singulus.de

All figures in KEUR, except * (actual number)* * based on 36,947,226 shares at 1 EUR per value at Dec. 31, 2002

| || | | ATA

GLAN

CE| |

||||||

|||| ||||||||||||

A N N U A L R E P O R T 2 0 0 2

1999 2000 2001 2002

KEUR KEUR KEUR KEUR

Gross Revenues 177,258 375,722 225,525 290,548

Profit before Tax 45,493 94,724 42,448 54,521

Net Income 23,781 48,655 27,935 36,589




R & D Expenses 4,359 9,013 8,307 16,155

Staff* (31.12.) 212 319 367 502


|| | || | ||| || | | | | | | | ||| || | | D I G I T A L C O D E | | ||| || | ||| || | || | || | || | || | ||| | |

> AT A G L A N C E

| || | ||| || | | | | | | | ||| || | | D I G I T A L C O D E | | ||| || | ||| || | || | || | || | || | ||| | |



D - 63 796 Kahl

Fon +49 - 6188 - 440 - 0

Fax +49 - 6188 - 440 -110


www.singulus.de


| || | | ATA

GLAN

CE| |

||||||

|||| ||||||||||||

A N N U A L R E P O R T 2 0 0 2

R E V E N U E S (in Mio. EUR)

1999

2000

2001

2002

177,3

375,7

225,5

290,5

400 350 300 250 200 150 100 50 0

E B I T (in Mio. EUR)

1999

2000

2001

2002

100 90 80 70 60 50 40 30 20 10 0

44,8

93,4

40,2

52,7

F I N A N C I A L R E S U L T S (in Mio. EUR)

■ Profit Before Tax

■ Net Income

1999

2000

2001

2002

100 90 80 70 60 50 40 30 20 10 0

48,794,7

27,942,5

36,654,5

23,845,5

N E T I N C O M E (%)

E A R N I N G S P E R S H A R E (EUR, DVFA / SG)

1999

2000

2001

2002

16 14 12 10 8 6 4 2 0

14,2

14,1

13,1

13,1

1999

2000

2001

2002

2,00 1,00 0

0,66

1,35

0,77

1,01

C A S H - F L O W (in Mio. EUR)

1999

2000

2001

2002

50 45 40 35 30 25 20 15 10 5 0

25,65

49,96

29,61

38,3

Imprint

Published bySINGULUS TECHNOLOGIES AG, Kahl/Main

ProductionMetaCom Corporate Communications GmbH,Hanau

Conception and IdeaBernhard Krause

TextDr. André Hülsböhmer,Bernhard Krause,SINGULUS TECHNOLOGIES AG

ArtworkJens Gloger, Andrzej Korzec

DTPMetaCom Corporate Communications GmbH,Andrzej Korzec

PhotographyViktor DieboldWerksfotos SINGULUS TECHNOLOGIES AGBilderdienste

PrintingBraun & Sohn, Maintal

Printed on chlorine-free bleached paper


Hanauer Landstraße 103D-63796 Kahl

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

Internet: www.singulus.deemail: [email protected]

28.03.03 Quarterly Report 4/2002 and Annual Closing 2002

Annual Press Conference, 10:00 am, Commerzbank

DVFA-Meeting, 1:00 pm, Commerzbank, Frankfurt/Main

05.05.03 Quarterly Report 01/2003

15.05.03 Analyst/Investors Meeting, Las Vegas, USA

26.05.03 Annual Shareholders Meeting, 10:30 am,

Deutsche Bank, Hermann-Josef-Abs Saal, Frankfurt/Main



C O M PA N Y C A L E N D A R 2 0 0 3

0 0 2

0 0 4

0 0 7

0 1 2

0 1 8

0 2 2

0 3 0

0 3 0

0 3 1

0 3 4

0 3 8

0 3 9

0 4 0

0 4 3

0 4 4

0 4 5

0 4 6

0 4 9

0 5 0

0 5 1

0 5 2

0 5 2

0 5 3

0 5 4

0 5 5

0 5 6

0 5 9

0 6 2

1 0 3

1 1 1

1 1 4

| || | | CON

TENTS

| |

> C O N T E N T S

l At a Glance

l Notable Events in 2002l Supervisory and Managing Boards

l Supervisory Board Report l Letter to Shareholders

l Corporate Goals and Strategies l SINGULUS Optical Disc Machinesl SINGULUS goes MRAMl Status Report for SINGULUS TECHNOLOGIES Consolidated

and SINGULUS TECHNOLOGIES AGl General Economic Conditionsl Business Developments in Reviewl The Market for DVD Formatsl Blu-ray Discl Research and Developmentl Super Audio CD Technology l Sales and Service: Maintaining Global Activityl Staffl Managing Board Changesl Revenues and Earningsl Order Backlog and Bookingsl Balance Sheet and Earnings Utilization l Equity Ratio l Capital Expenditures and Financingl Cash Flow, Liquidityl Risk Report/KonTraGl Environmental Protectionl Corporate Governancel SINGULUS TECHNOLOGIES Stockl Post-12/31/02 Events and 2003 Forecast

l Year-End Closing SINGULUS TECHNOLOGIES Consolidatedl Year-End Closing SINGULUS TECHNOLOGIES AGl Glossary of Technical Termsl SINGULUS TECHNOLOGIES AG Declaration

in accordance with §161 AKTG

l Corporate Calendar 2003

P A G E0 0 1

J A N U A R Y F E B R U A R Y M A R C H A P R I L M AY J U N E

SINGULUS sets 2002objectives at internationalsales meeting.

SINGULUS announcespreliminary figures forfiscal 2001: Revenues:225.5 million Euro; NetIncome: 27.9 millionEuro.

First major orders awarded for prerecordedDVD systems total over34 Mio. Euro.

Over 80 analysts and 10journalists attend theyear end AnalystMeeting.

SINGULUS establishesnew business sector: TMR technology thin filmdeposition systems.

Fast, 2.7 sec. cycle timeCD-R replication lineintroduced to the market.

The publication “FocusMoney” bestows on SINGULUS its 2nd placeaward for GermanInvestor Relations in theNeuer Markt.

Stock reaches 35.50 Eurohigh for the year.

SINGULUS and Philipsfinalize a cooperationagreement for CD-RWund DVD+RW.

Quarterly figures 1/2002:77.5 million Euro orderintake and 53,5 Mio.Euro in revenues.

The new SUNLINE replication line for the manufacture ofrewritable DVD is shownin operation at theMedia Tech tradeshow in Frankfurt.

Additional major DVDorders are awarded;order intake for the yeargrows to 130 SPACELINEsystems.

> N OTA B L E E V E N T S I N 2 0 02

P A G E0 0 2

J U LY A U G U S T S E P T E M B E R O C TO B E R N O V E M B E R D E C E M B E R

1000 m2 building addition for R&D andEngineering is started SINGULUS confirms 2002 projections for anincrease of at least 20%in net profits

3rd Quarter Report 2002– Figures exceed 2002projections.

Dr. Christian Holtmann,CFO, resigns on 12/31/02.

On 12/12/02, SINGULUSreceives written notifica-tion of its admission tothe Prime Standard.Inclusion in the TecDAXensued in early February2003.

On 08/05/02 extremelystrong figures are reported for the 2ndQuarter 2002; the market, however, fearsstagnation in DVDgrowth – stock priceplummets.

In a letter to sharehold-ers, the Managing Boardexpounds upon the company’s growth strategy.

SINGULUS is the largestexhibitor of DVD andDVD±R replication sys-tems at the ReplicationExpo in Shanghai.

As Reiner Seiler’s successor, Klaus Hammenis appointed to theManaging Board, heading R&D, Sales andMarketing.

SINGULUS introducesnew STREAMLINEDVDR/SP replication linefor the manufacture ofDVD±R.

The German StockExchange announces the restructuring of thestock market on09/26/02.

In a letter to sharehold-ers on 9/26/02, the Managing Boardendorses the creation ofthe new sectors in thestock exchange.

The Media TechShowcase convention forthe optical disc industryis held in Las Vegas.

On 09/04/02, SINGULUSreceives 2nd place awardfor Capital InvestorRelations in 2002.

The successful SPACELINEreplication line isenhanced to manufac-ture Super Audio CD(SACD). 3 SPACELINESACD systems areordered in 2002.

Retirement ceremonyheld on October 31 forReiner Seiler, ManagingBoard Vice Chairman andcompany co-founder.

10/14/02 - SINGULUSreceives InvestorRelations Magazine’s 1stplace Euro Award.

| || | | NO

TABLE EVEN

TS| |

P A G E0 0 3

> S U P E R V I S O R Y B O A R D R E P O R T

In fiscal 2002, the Supervisory Board regularly addressed the status and develop-ment of the company in accordance with the duties and responsibilities it wascharged with by law and company statutes. In exercising those duties, it regularlyadvised the Managing Board on its intended business policies and fundamentaladministrative issues and monitored the management of the company. The ManagingBoard conferred with the Supervisory Board on the strategic direction to be taken by the company and also informed the Supervisory Board on the status of its imple-mentation. The Managing Board regularly advised the Supervisory Board, in both verbal and written form, of company plans, business developments, departure fromplanned activities, the state of the company, and fundamental business events andprojects.

In 9 sessions, 2 via written communications and 3 conducted by conference call, the Supervisory Board addressed in detail the status of the company, the acquisition(OMP – NL on January 1, 2002), the corporation’s year-end closing, the examinationof existing operations (subsidiaries), Managing Board personnel matters and theManaging Board’s risk management system. Important specific business incidents were examined by the Supervisory Board which then passed resolutions on businessrequiring its approval. The Supervisory Board closely monitored the actual corporategovernance, adherence to the Code of Corporate Governance and contributed to the compliance declaration.

P A G E0 0 4

> S U P E R V I S O R Y B O A R D

Alexander von EngelhardtKronberg

Chairman

William SleeLondon

Vice Chairman

Thomas GeitnerCologne

In addition to their regularly held sessions, the Supervisory Board Chairman haddiverse contacts with the Managing Board Chairman to discuss development of thebusiness, individual subsidiaries and business events. The Supervisory Board wasinformed accordingly (Fig. 5.2 of the German Code of Corporate Governance).

The Supervisory Board also specifically addressed matters of accounting standardsand risk management, the necessary independence of the auditor, granting of theaudit assignment, the determination of critical audit areas, and the audit fee.

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

Methods for evaluating the duties of the Supervisory Board are to be developed andimplemented in fiscal 2003 (Fig. 5.6 of the Code). The approval of Supervisory Boardremuneration above and beyond a set profit-based compensation has been availablefor review as of the last Annual Shareholders’ Meeting (Fig. 5.4.5 of the Code).

The fiscal 2002, financial statements for SINGULUS TECHNOLOGIES AG, the fiscal2002 consolidated financial statements and the consolidated status report werereviewed and approved without reservation by Ernst & Young Revisions- undTreuhandgesellschaft mbH Wirtschaftspruefungsgesellschaft Steuerberatungs-gesellschaft (formerly Arthur Andersen Wirtschaftspruefungsgesellschaft Steuer-beratungsgesellschaft mbH, Eschborn/Frankfurt), the certified public accounting firmappointed as auditor at the Annual Shareholders’ Meeting. The auditor presented theManaging Board’s Risk management and control system in his report and found it tobe suitable for the timely identification of situations threatening the survival of company. At the behest of the Supervisory Board, the auditor examined the Code ofCorporate Governance compliance statement for accuracy; no objections were made.

The Supervisory Board examined the year-end financial statements for SINGULUSTECHNOLOGIES AG as well as the year-end consolidated financial statements, theconsolidated status report and recommended earnings utilization, discussing the documents in detail with the Managing Board in the presence of the auditor. Theauditors reported on the overall results of their audit as well as specific importantissues, responding to questions posed by Supervisory Board members in detail. TheSupervisory Board acknowledged and approved the auditors’ report.

P A G E0 0 5

| || | | SUPERVISO

RY BOA

RD

| |

No objections were raised following issuance of the final audit report on the annualclosing and consolidated closing. In a session held on March 20, 2003, theSupervisory Board approved and finalized the annual financial statements for SINGULUS TECHNOLOGIES AG; it also acknowledged and approved the consolidatedfinancial statements. The Supervisory Board concurred with the recommendation for the utilization of retained earnings.

On September 18, 2002, Mr. Reiner Seiler retired from the company. He was one of the founders of SINGULUS TECHNOLOGIES GmbH in 1995; the company went public in 1997 and re-named SINGULUS TECHNOLOGIES AG. Mr. Seiler’s efforts onbehalf of the company yielded exceptional results. We thank him for his service andlong-standing commitment to the company.

Mr. Klaus Hammen was appointed to the Managing Board as Mr. Seiler’s successoron September 2, 2002 and heads the Marketing, Sales and R&D departments.

Dr. Christian Holtmann resigned from the Managing Board and company at theclose of 12/31/02. He will remain associated with SINGULUS TECHNOLOGIES AG in an advisory capacity. We thank Dr. Holtmann for his accomplishments and wish himsuccess in his future endeavors.

Mr. Stefan A. Baustert was appointed to the Managing Board as Dr. Holtmann’s successor on 1/15/03. As CFO he is responsible for the Finance, Controlling, andPersonnel departments.

The Supervisory Board extends its thanks and gratitude to the Managing Board andemployees of the company in recognition of their accomplishments during the pastyear.

Kahl am Main, March 2003THE SUPERVISORY BOARD

Alexander von EngelhardtChairman

P A G E0 0 6

Roland Lacher

Klaus Hammen

Stefan A. Baustert

P A G E0 0 7

| || | | LETTER TO SH

AREH

OLD

ERS| |

> L E T T E R TO S H A R E H O L D E R S

Dear Shareholders:

2002 proved to be a very good year for our company. Lively growth permitted the2001 downturn to recede from memory. A high export rate of over 90 % of our revenues made us largely independent of the ongoing weak German economy.Shipments to Europe, the U.S., and Asia were evenly distributed for the first time,with each region sharing one-third of the business.

The acquisition of SINGULUS EMOULD at the end of 2001 and SINGULUS OMP at the beginning of 2002 has significantly expanded our product line through the addition of injection molding machines and mastering systems. Both companies were successfully integrated into the corporation in 2002. We were also able to concurrently accelerate the technical advances of these products.

The value these acquisitions provide will become evident in the years to come, asthey are not based on earnings alone. These acquisitions also provide exclusive in-house development capabilities for additional important technologies. This will lead to improved integration of individual components and more importantly, raisethe average rate of our product development.

> M A N A G I N G B O A R D

Roland LacherGelnhausenChief Executive Officer

Reiner Seiler (until 18.09.2002)Gelnhausen

Klaus Hammen( from 02.09.2002)Untermeitingen

Dr. Christian Holtmann (until 31.12.2002)Kronberg

Stefan A. Baustert ( from 15.01.2003)Krefeld

No competitor can make a similar claim; in conjunction with our global sales andservice organization, we have created the best prerequisites for delivering the systemsolutions our customers desire. Our turnkey, single-source strategy will enable us togradually expand our world market leadership position.

The predominant impetus for growth originated in the DVD sector, triggering strong demand for DVD systems. The successful advances made by DVD movies andcomputer games in the USA has since fully extended to Europe. Recent advances have also been noted in Asia.

The annual growth rate of the DVD sales market is approximately 40 % at present.Despite this strong growth, the market penetration of DVD players in Europe is just 25 %, compared to 40 % in the USA. Both figures are far removed from the 90 % saturation rate for VHS video recorders. This variance presents a tremendous growthpotential for our machines and systems in the years ahead.

> E A R N I N G S O R I E N T E D G R O W T H

In 2002, consolidated revenues increased 28.8 % over the previous year to 290.5 million Euro. At the same time, growth in annual profits rose by 31 % to 36.6 millionEuro so that earnings per share, in accordance with the U.S. GAAP standard, totaled0.99 Euro(DVFA/SG 1.01 Euro). The high net earnings ratio of 13.1 % remained at thehigh level achieved the year before (13.1 %) and provided renewed confirmation ofthe company’s exceptionally strong, fundamental profitability. Equity capital grew to 181.6 million Euro (+34.1 %) reaching a 69.0 % share of the balance sheet total (prior year 72.2 %).

It is now evident that the transition from the CD to the DVD generation will be justas widespread for both of the other formats (recordable DVD±R and rewritable

P A G E0 0 8

Mastering Moulding Curing InspectionMetallizing

Competence Thin Film Sputtering Technology

The SINGULUS Core Competence Opens up New Market Opportunities

CD: Lacquering

DVD: Bonding

CD-R: Dye Coating

S I N G U L U S T E C H N O L O G I E S C O R E C O M P E T E N C E

DVD±RW/DVD-RAM). We have already developed the systems and processes requiredfor these formats. We are prepared and determined to conquer these new businesssectors and seize the growth opportunities they offer – faster and more successfullythan our competitors are able to do.

> VA C U U M D E P O S I T I O N T E C H N O L O G I E S : A VA S T F I E L D

Manufacturing specialty machines for optical data storage (CD, DVD, etc.) is onlyone of a number of application areas we consider to be our core competence: thedevelopment and manufacture of innovative machines and systems in select areas ofapplication using vacuum thin film deposition technology.

Having achieved an exceptional position in the world market for optical data storage, the development of TMR technologies became our first venture into other business areas. We are currently engaged in securing additional fields of operation.

The SINGULUS TMR technology development team, established expressly for thatpurpose, completed the new TIMARIS thin film vacuum deposition system during the year in report. As of the first quarter 2003, the system was able to apply samplecoatings to silicon wafers for either MRAM chips or new TMR thin film heads formagnetic hard disc drives. As a result, the sale of this new system technology canbegin in the major U.S. and Asian markets. We are confident that initial sales willsoon be recorded. Related development costs have been absorbed in the 2002 year-end figures.

We intend to clearly expand the business base of our company with these invest-ments in the future. Our motives are apparent: first, we would like to permanentlyreduce our dependence on a single business or technology, and second, we would like to create the potential for sustained growth.

Our long-term goal is the worldwide recognition of SINGULUS TECHNOLOGIES as asynonym for innovative machines and systems encompassing select, highly profitableapplications that employ vacuum thin film deposition technology. We will make greatstrides towards achieving this goal in 2003.

Kahl am Main, 28.02.2003THE MANAGING BOARD

Roland Lacher Klaus Hammen Stefan A. Baustert

P A G E0 0 9

| || | | LETTER TO SH

AREH

OLD

ERS| |

S U C C E S SW I T H S U P E R I O R P R O D U C T S . . .

. . . A N D A S U P E R I O R

S T R A T E G Y> C O R P O R AT E G O A L S A N D S T R AT E G I E S

> C O R P O R AT E G O A L S A N D S T R AT E G I E S

The stock market has moods which are difficult to elude regardless of the directiontaken. The direction a stock takes always reflects the overall and financial market sensitivity.

> E A R N I N G S A N D G R O W T H

The SINGULUS stock was able to shake off the pervasive sense of doom during thepast three years of decline in the Neuer Markt. The reason is apparent: since the company’s founding in 1995 and particularly since its IPO in November 1997, ouroverall strategy has been clearly and uncompromisingly directed towards earnings and growth. In the company’s relatively short history, an organization has been built that is exceptional in terms of substance, technological competence, fundamentalprofitability and growth potential extending far beyond this segment of the stockmarket.

During the financial press conference held at the end of March 2002, the ManagingBoard projected that growth for fiscal 2002 would exceed the preceding year’s revenues and net earnings by 20 %. Despite a general decline in the economic moodduring the course of the year, these figures were far surpassed as revenues rose to 28,8 % and earnings to 31 %.

The earnings growth with an unchanged equity base kept pace with the growth inrevenues. Adjusted by expenditures for entirely new business ventures, SINGULUSexhibited markedly higher growth in earnings. Earnings were intentionally declined infavor of expansion of long-term growth prospects. Not many companies, especially in 2002, were able to create a similar success story.

> C O N T I N U O U S G R O W T H

Adjusted by the exceptional year 2000, the business model for SINGULUS TECHNOLOGIES AG has been continually directed on an upward course.

Since its founding, the company concentrated its business activities on optical discreplication technology. Its entrepreneurial creativity, technological innovation, andexcellent international marketing has transformed the company into a worldwidemarket leader within a few years. Its goal was to be ever present as the premier supplier of leading technology for CD and DVD replication systems in all three coreapplications (prerecorded, recordable and rewritable discs).

P A G E0 1 2

> F A S T E R A N D B E T T E R

„Time to Market“, i.e., the period of time that elapses between the inception of anidea and the appearance of a product on the market, is one of the most importantfactors for success in the technology industry. The first to provide critical mass interms of market share will be the one to later reap a high quality of earnings. SINGULUS’ double-digit net earnings ratios has proved year after year that this correlation could be used for its own development and strategy.

The company’s extremely lean business model, coupled with complete outsourcing of production parts and components, led not only to above-average earnings peremployee, but to exceptional gross margins without sacrificing low fixed costs.

The factors we believe determine success in the market (design competence, qualitycontrol, marketing competence, and excellent service encompassing all products) werecontinually enhanced by the company. This strategy has paid off.

> D E PA R T U R E F O R N E W M A R K E T S

A technology company is always a specialist. A technology company with a future,however, is always able to tap new application areas for its core competence.

As a rule, a technological niche is usually shielded from outside competition by highentry barriers and, is therefore, attractive. The downside is that its size is limited by itsvery nature. Those achieving leadership in a niche market have virtually exhausted alarge portion of its growth potential and ultimately can only grow along with themarket.

P A G E0 1 3

| || | | CORPO

RATE G

OA

LS/STRATEG

Y| |

SINGULUS began to encompass new fields at the end of 2001 after have provedduring its nearly eight year history that a company can independently lead a globallysuperior business model to success in a niche market.

> T H R E E C O R E C O M P E T E N C I E S

SINGULUS’ core competence is three-tiered: one technical, one strategic and salesand marketing. Technologically, the company is not just a specialist manufacturingreplication systems for the optical data storage media, it is also a specialist in thedesign and manufacture of innovative machines and systems for all aspects of vacuum deposition technology.

An initial new business sector – the development of a TMR thin film sputtering system for the manufacture of MRAM wafer and read-write heads for the next generation of hard disc drives – will be extensively reviewed later in this report (see „SINGULUS goes MRAM“ text that follows). Industry experts predict the introduction of MRAM wafer will produce revolutionary advances in computer technology, particularly for laptops and „smart“ hand-held devices such as PDAs,UMTS cell phones, etc. MRAM storage media are expected to incrementally replace up to 50 % of DRAM storage by the year 2010. Nearly all global semiconductor manufacturers such as IBM, INFINEON, MOTOROLA, MICRON, SAMSUNG, NEC, who,among others, are currently working on the development and future productionlaunch of MRAM technology, are potential customers for the SINGULUS 300mm wafer TMR thin film sputtering system. The prototype was completed at the beginning of 2003.

Long-term, these new business endeavors should be no less profitable than opticaldisc systems manufacturing. Fundamentally, SINGULUS continues to rely on its program of in-house expansion. Nevertheless, diversification through acquisition cannot be ruled out.

> C R I T E R I A F O R N E W B U S I N E S S

> C O R E C O M P E T E N C E I N VA C U U M T H I N F I L M C O AT I N G

> C O R E C O M P E T E N C E I N S Y S T E M B U S I N E S S

> C O R E C O M P E T E N C E I N G L O B A L M A R K E T I N G A N D S E R V I C E

> E M E R G I N G A N D G R O W T H M A R K E T S

> H I G H M A R G I N O R I E N TAT E D B U S I N E S S M O D E L

P A G E0 1 4

P A G E0 1 5

| || | | CORPO

RATE G

OA

LS/STRATEG

Y| |

> G O O D P R O S P E C T S O N S O L I D G R O U N D

Exploration of new endeavors were initiated (and, in terms of the profit and lossbalance sheet, largely absorbed) at a time when the success of the company’s corebusiness was still years away from reaching its apex.

The SINGULUS stock was spared neither the volatility of the new economy nor theeffects of the burst in the technology bubble. Nevertheless, the success in its corebusiness, its earnings strength, its technology potential and competitiveness were notaffected. The corporation’s fundamental values and key figures remain exceptionaland can be measured against the best international companies.

> S I N G U L U S O P T I C A L D I S C M A C H I N E S

> S I N G U L U S G O E S M R A M

S U C C E S SW I T H S U P E R I O R P R O D U C T S . . .

. . . A N D A S U P E R I O R

S T R A T E G Y

> S I N G U L U S O P T I C A L D I S C M A C H I N E S

> S K Y L I N EExpansion of our line business began with the SKYLINE CD replication line in 1996 and led to the attainment of our global lead in the marketplace. Since that time our customers have purchased over 1300 machines which are used for all prerecorded CD formats.

> S K Y L I N E D U P L E XThe Duplex compounded the market success of the SKYLINE CD replication system. Its combined CD/DVD 5 application garnered market share for the company all over the world.

> S PA C E L I N EIn 2002, sales were realized for 182 SPACELINES. With over 400 lines in operation, the SPACELINE has become the most frequently sold system for DVD replication.

> S PA C E L I N E S A C DIn September 2002, a new SACD (Super Audio CD) replication line for super audio hybrid discs was introduced to the market. It is modeled on the successful DVD SPACELINE yet can also be used for DVD production.

> S T R E A M L I N E C D - RToday, the CD-R STREAMLINE is one of the most reliable systems on the market.

> S T R E A M L I N E D V D R / S PThe Spaceline metallizing and bonding modules were combined to form the basic system in the STREAMLINE for the new DVD-R growth format.

> M O D U L U SThe modular design of the MODULUS RW metallizer comprises the core component of our RW replication line.

> S U N L I N EIn the fall of 2002, the new SUNLINE RW became the first replication line certified for DVD+RW by PHILIPS to manufacture rewritable DVDs in production.SINGULUS thus became the first systems manufacturer in the world to receive certification for DVD+RW production on a machine operating in fully automatic mode.

P A G E0 1 8

P A G E0 1 9

| || | | SING

ULU

SO

PTICAL

DISC

MA

CHIN

ES| |

P A G E0 2 0

> S I N G U L U S E M O U L D I N J E C T I O N M O L D I N G M A C H I N E SEMOULD performance exceeds expectations: In 2002 SINGULUS EMOULD GmbH manufactured over 250 machines. The reliability and performance of these machines is valued the world over. EMOULD machines are suitable for all prerecorded, recordable and re-recordable CD and DVD formats.

> S I N G U L U S O M P M A S T E R I N G S Y S T E M SIn 2002, SINGULUS OMP enhanced its successful DMS 8000 system and in January 2003, introduced the DMS Evolution, the first mastering system designed specifically for DVD formats.

> S I N G U L U S VThe SINGULUS V metallizer was successfully established in the market following its launch in 2001.

O P T I C A L D I S C T E C H N O L O G Y

C D - T E C H N O L O G Y : Storage Capacity approx. 650 MB

Prerecorded Information

CD, CD-ROMRead Only Memory

ROM

D V D - T E C H N O L O G Y: Storage Capacity max. 9,4 GB (18 GB)

D V R - T E C H N O L O G Y (Blu-Ray): Storage Capacity 27 GB (2 x 25 GB)

Rewritable

CD-RWWrite-Erase-ReWrite

RW or RAM

Recordable

CD-RWrite Once Read Many

WORM

Prerecorded InformationRead Only Memory

ROM

RewritableWrite-Erase-ReWrite

RW or RAM

RecordableWrite Once Read Many

WORM

Prerecorded Information

DVD-Video, DVD-ROMRead Only Memory

ROM

Rewritable

DVD±RW, DVD-RAMWrite-Erase-ReWrite

RW or RAM

Recordable

DVD±RWrite Once Read Many

WORM

P A G E0 2 1

| || | | SING

ULU

SO

PTICAL

DISC

MA

CHIN

ES| |

> S I N G U L U S G O E S M R A M

Kahl am Main, March 2003. Over a year has passed since this project was officiallylaunched. An assessment of this ambitious project proves favorable: the 20-personTMR technology development team completed the TIMARIS prototype thin film deposition system during the year in report.

P A G E0 2 2

I N I T I A L A D VA N C E I N TO A N E W F I E L D O F A P P L I C AT I O N F O R VA C U U MD E P O S I T I O N M A C H I N E S

On March 27, 2002, SINGULUS TECHNOLOGIES AG formally announced the expan-sion of its business endeavors to include the new field of vacuum thin film depositionsystems for TMR technology. Such systems are prerequisites for manufacturing semiconductor elements, more precisely termed „MRAM storagemedia “, and new elements in read/write heads for hard disc drives (magnetic heads). Industry expertsbelieve that MRAM storage media will largely become technical successor to theDRAM standard which now dominates the market. Due to its retention of storagecontent after power is disconnected and a two- to three-fold reduction in energyconsumption, this storage media is extremely attractive, particularly for wirelessapplications. What opportunities does this market offer SINGULUS?

S TO R A G E H I E R A R C H Y C O M PA R I S O N O F S TO R A G E M E D I A

SemiconductorMemory

DRA

M &

Co

MRA

M

Performance

Price

(Status 7/02)

SRAM

Flash

DRAM

HD

OUM

FRAM

MRAMCost

s (U

SD/G

B)

DVD RAM

Access time (ns)

10000

1000

100

10

1

1,0E+00 1,0E+01 1,0E+02 1,0E+03 1,0E+04 1,0E+05 1,0E+06

Magnetic Disc

Optical Disc

Magnetic Tape

Capacity

P A G E0 2 3

| || | | SING

ULU

SG

OES

MRAM

| |

The milestones set at the beginning of the year have all been achieved. As of thefirst quarter 2003, this system has applied sample layers to silicon wafers for eitherMRAM chips or the new TMR thin film heads for magnetic hard disc drives. Thin filmdeposition technology is one of many key technologies that will ultimately providesolutions superior to those provided by existing storage formats and thin filmread/write heads.

> T M R T E C H N O L O G Y F O R H A R D D I S C D R I V E R E A D / W R I T E H E A D S ( M A G N E T I C H E A D S )

Personal computers (PCs) have changed drastically during the last decade. They have become significantly faster and more powerful. This is not only the result of theincreased speed and power of processors, but also due to the improved performanceof storage technology.

Storage densities were increased in 1990, particularly on hard drives. In 1996/97this process received another boost, principally from a leap in technology resultingfrom the use of new elements in the so-called read/write heads of hard drive systems.These heads not only read but write the information stored on hard drives.

The element employed since 1990 was based on the so-called AMR effect(AMR=anisotropic magneto resistance). The element employed since 1996/97 is basedon the so-called GMR effect (GMR= giant magneto resistance). These two physicaleffects became the foundation for the fundamental innovations in hard drive

S A L E S E X P E C TAT I O N S W I T H M O B I L E D ATA S E R V I C E S (in Billion US$)

Source: FAZ, 17.02.03Ovum, 2003

■ Communication

■ Information

■ Entertainment

2003

2004

2005

2006

2007

60 50 40 30 20 10 0

P A G E0 2 4

technology during the past 15 years. They were the primary reason for the growing business in the hard disc industry. Magnetic storage media (hard drives) were able toassert and expand their exceptional role in the development of PCs through the AMRand later GMR processes. Today they are still the most efficient storage media for thisfield of application.

> T H E F U T U R E O F H A R D D I S C D R I V E S H A S A N A M E : T M R

Virtually all hard drive manufacturers (and hence potential TIMARIS vacuum thin film deposition machine customers) agree that the next generation of read/write elements will be based on the TMR effect. The explosion in hard drive performancecannot arrive too soon. The introduction of hard drives to consumer electronics (i.e., used for buffer storage in time delay TV, for interim storage of broadcasts duringparallel reception, perhaps even for downloading film data from the internet, etc.)leads to expectations for a tremendous increase in demand for high-performance hard drives. Private film archives have high storage requirements. This segment of themarket will drive hard drive storage densities in the terrabyte per square inch realm(Tbit/inch2) and promises further growth in this industry.

SINGULUS will help create the ensuing market for vacuum thin film depositionmachines for TMR-based read/write elements and actively participate in its growth.The high-end deposition technology required will be a challenge to the core competence of the engineers in Kahl am Main.

> T W O V I S I O N S , O N E C O R E T E C H N O L O G Y

High tech vacuum deposition is one of the most important key technologies for theadvancement of performance parameters in the IT world. When layer thicknessesapproach the realm of less than a micrometer, it is also referred to as „nanotechnology“.

What does „universal semiconductor storage media“ mean? Among its characteristics,existing semiconductor memory still has either the disadvantage of losing informationas soon as its electrical power source is removed (DRAM, SRAM, Flash), or is extremelyslow (Flash). The universal semiconductor storage of the future should be non-volatileand extremely fast, yet consume less energy, achieve storage densities comparable toDRAM, and naturally cost no more than established solid state memory. In short: aneffort is being made to “square the circle”.

P A G E0 2 5

| || | | SING

ULU

SG

OES

MRAM

| |

At present, the most promising storage technology is offered by the so-calledMRAM (magnetic random access memory) wafer based on the TMR effect.Approximately 30 semiconductor companies around the world are currently engagedin the development of this technology, including most major companies such asInfineon, Micron, Motorola, Samsung, NEC and others.

While semiconductor components have thus far been produced only on silicon substrates with a maximum diameter of 200 mm, MRAM chips will be produced on300 mm diameter substrates (so-called Si wafers) in the future, although 200 mmMRAM wafers will presumably still be produced initially. Machines for 300 mm diameter wafers operate much more cost effectively than 200 mm machines since the substrate surface (and consequently the chip quantity) is nearly double.

The costs per wafer i.e., chip, must be minimized. This lead to an economic need toobtain a high yield of chips per wafer which in turn leads to extremely high demandsfor uniformity of the applied layers and productivity of the deposition systemsemployed in MRAM applications.

> N E W F R O M T H E O U T S E T

The TIMARIS conceived by SINGULUS was specifically designed for the semiconduc-tor industry from the outset. It does not resort to older machine concepts but isinstead „tailor-made“ for this application. All drafted requirements were taken intoconsideration during the design phase. The TIMARIS has shown exceptional resultsbased on all tests conducted thus far.P A G E

0 2 6

S E M I C O N D U C TO R M A R K E T F O R E C A S T (in Billion US$)

Source: World Semiconductor Trade Statistics, 10/2002

2001

2002

2003

2004

210 200 190 180 170 160 150 140 130 120

197.8

165.9

142.2

139.0

How extensive is this market? The utilization of new storage in wireless electronicdevices (cell phones, notebooks, hand-held PCs) is attractive because energy consumption has been drastically reduced and usable wireless time can be extended.As soon as MRAM storage technology can be cost effectively mass produced, a strongdemand could ensue in the market.

The market development rate for new technologies is by its nature difficult toassess. However, SINGULUS maintains that in the years ahead, new investments inthin film deposition machines will number in the tens of millions of Euros and even in the hundreds of millions by 2005. SINGULUS intends to capture a significant portion of this market. While competitors have the advantage of a better-established customer base in the semiconductor industry, the SINGULUS engineers in Kahl consider themselves more technically advanced.

P A G E0 2 7

| || | | SING

ULU

SG

OES

MRAM

| |

E Q U I P M E N T M A R K E T (in Billion US$)

Source:

VLSI Research, 2002

2001

2002

2003

2004

2005

2006

90 80 70 60 50 40 30 20 10 0

4,0

11,3

23,9

50,9

60,2

80,3

■ Bridge Tools(200/300 mm)

S T A T U S R E P O R T 2

General Economic Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 030

Business Developments in Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 031

The Market for DVD Formats . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 034

Blu-ray Disc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 038

Research and Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 039

Super Audio CD Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 040

Sales and Service: Maintaining Global Activity . . . . . . . . . . . . . . . . . . . . . . Page 043

Staff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 044

Managing Board Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 045

Revenues and Earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 046

Order Backlog and Bookings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 049

Balance Sheet and Earnings Utilization . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 050

Equity Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 051

Capital Expenditures and Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 052

Cash Flow, Liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 052

Risk Report/KonTraG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 053

Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 054

Corporate Governance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 055

SINGULUS TECHNOLOGIES Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 056

Post-12/31/02 Events and 2003 Forecast . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 059

0 0 2

> S TAT U S R E P O R T F O R S I N G U L U S T E C H N O L O G I E S C O N S O L I D AT E D A N D S I N G U L U S T E C H N O L O G I E S A G

> G E N E R A L E C O N O M I C C O N D I T I O N SA moderate growth in Germany, moderate growth in the remainder of Europe, a

sluggish recovery in the U.S., an extended downturn in Japan, and an upward shiftevident only in Southeast Asia: the economy currently presents an inconsistent, somewhat weakened portrait. Overall indications, however, are still positive, althoughan upswing is evident only in the People’s Republic of China and isolated SoutheastAsian countries.

Nevertheless, the gradual slow-down in the world economy that followed the yearsof prosperity from 1998-2000, appears to be coming to an end. In its most recentpublication (February 2003), the Deutsche Bank estimated that growth in the worldeconomy in terms of actual gross domestic product rose to 2.8 %. This should accelerate to 3.3 % this year, culminating in a real upswing in 2004 that will bereflected in a rate of +4 %.

SINGULUS TECHNOLOGIES is removed from this scenario in two respects: first,although Germany is the organization’s principal research and manufacturing site, a mere 6 % of goods produced are sold in its domestic market. Over 90 % are distributed to the U.S. and South America, Asia and the remainder of Europe. SINGULUS operates within a global market.

P A G E0 3 0

The company availed itself of the opportunity to issue a combined status report forthe consolidated SINGULUS TECHNOLOGIES group and SINGULUS TECHNOLOGIES AGin accordance with § 315 Par. 3 HGB. Because business proceedings, status of the corporation and risks to the future development of SINGULUS Technology AG and SINGULUS TECHNOLOGIES consolidated are generally identical, the following statements and especially the numbers presented, refer to the SINGULUS TECHNOLOGIES consolidated group.

SINGULUS looks back at an extremely successful year, one which revealed botharrival and departure. Important inroads were made toward capturing additional market share and in the development of new products in the company’s principal business of mafacturing optical data storage replication systems (CD, DVD). Moreover,the company laid the foundation for new business sectors.

Second, the company operates in a growth market characterized by rapid innovations and leaps in technology; the market for optical data storage media is one which has not yet peaked. Along the full extent of its value-added chain, DVD in particular, remains unaffected by this otherwise bleak economic picture.

> B U S I N E S S D E V E L O P M E N T S I N R E V I E W

In 2002, SINGULUS achieved total revenues of 290.5 million Euro, an increase of28.8 % over the previous year (225.5 million Euro). Net earnings for fiscal 2002 rose to 36.6 million Euro, a repeat 31 % increase over the prior year. Even net operatingmargins achieved in years past were sustained at their high 13.1 % level.

These excellent results can largely be attributed to high revenues for DVD replication systems. A total of 182 DVD installations were booked in fiscal 2002,achieving for the company a global market share of approximately 65 % in this sector. Fiscal 2003 opened to brisk demand for all varieties of DVD format replication systems.

Consequently, SINGULUS TECHNOLOGIES ranks among the most profitable companies in the Nemax 50. In a written notification on 12/12/02, the company was admitted to the new „Prime Standard“ segment of the German stock exchange. In March 2003, the company was also included in the newly-formed TecDAX Index.

P A G E0 3 1

| || | | | |

STATU

S REPORT

| |

> S T U D I O A T M O S P H E R E

M O D E R N S O F T WA R E P R O F E S S I O N A L LY O U T F I T S A M AT E U R V I D E OF I L M M A K E R S – D V D C A M C O R D E R S I N S I G H T

It is common knowledge that the rewritable DVD can and will replace the old standard video cassette. Only in the world of amateur video recording has that beeneasier said than done thus far. A substantial degree of resourcefulness was required to record film content on a DVD. If the films were recorded in analog format, they first had to be rewritten and digitized on a computer equipped with an appropriateconversion card. Much of the quality of the raw material was frequently lost.

Alternatively, some video cameras already provide digital pictures. The data can betransferred to a computer via a generally available interface and there burned onto aDVD. The first camcorder capable of writing DVD-RAM was created by the Japanesemanufacturer Hitachi. During the CES tradeshow in Las Vegas a few weeks ago, Sonyalso introduced a camcorder able to directly record DVD. Additional conveniences forvideo applications in the DVD arena have thus been established.

In any case, there has been a shortage of quality and economical software thatwould have permitted image editing. However, during the course of 2002, a series of programs appeared on the market at virtually the same time; they now allowambitious amateurs to create interesting films by editing, processing and adding special effects to the raw material. Whether used on a semi-professional level (simple business applications) or by amateurs, the new software will presumably lead to a distinct revitalization of DVD±RW formats for video applications.

Even those for whom the DVD recorder is still too expensive already have goodalternative video applications at their disposal. New software is especially useful forolder computers equipped only with CD burners that compress video data and burnCDs using the MPEG standard. The appropriate MPEG data files can then be played on a DVD player.

P A G E0 3 2

P A G E0 3 3

| || | | | |

STATU

S REPORT

| |

P A G E0 3 4

> T H E M A R K E T F O R D V D F O R M AT S

> V O L AT I L E G R O W T H I N T H E P R E R E C O R D E D D V D M A R K E T

... During the year in report, more than 17 million DVD players were sold in theleading U.S. consumer electronics market, exceeding sales of conventional VHS videorecorders (13.5 million) for the first time. In 2001, the sale of 14.9 million VCRs clearly exceeded sales of DVD players (12.7 million).

The triumph of DVD first became apparent during the Christmas season 2001 and byearly 2003 had advanced much further than the annual figures shown for all of 2002.

A study conducted for the German market by the television networks ARD and ZDF(“VuMA” 2003 Consumer and Media Analysis) was published in late January 2003showing that growth rates in less-developed DVD markets are even higher: everytenth German plans to acquire a DVD player in 2003.

How rapidly the transition from CD and video cassette to DVD will unfold in thecurrent market, is shown by the vitality in sales of replication systems for prerecordedDVD video and computer games. International marketing institutes such as

U S D V D - V I D E O P L AY E R S E L L - I N (in Mio. Player)

Source: DVD-Report 27.12.2002, Issue 01/2003

Change: + 34,3 %

20.000 18.000 16.000 14.000 12.000 10.000

12.706 17.089 ■ 2002 ■ 2001

Understanding & Solutions project a 40 % growth rate in the U.S. and 60 % in Europewithin the next two to three years. Additional demand will be triggered by the Asianmarkets, primarily in the People’s Republic of China, albeit with a two to three yearlag time.

With a global market share of approximately 65 %, SINGULUS is indisputably themarket leader in the systems segment, far surpassing the closest competitor. The world’s largest DVD replicators has been a key SINGULUS customer for years.

...as well as for recordable... The market for DVD±R is living up to expectations withinitial system deliveries showing burgeoning growth. The DVD±R is predestined to beaccepted by consumers as quickly as CD-R was in the past. The recorders are availablein all electronics markets; if the price of players continues to decline, the demand fordiscs and, consequently, the demand for systems, will climb sharply. SINGULUS hasbeen prepared for the next generation of systems for quite some time.

...and rewritable DVD. The next challenge and growth opportunity is presented bythe mass production of rewritable DVD formats which will hasten the replacement ofVHS technology (magnetic tape video cassettes). The first DVD recorders manufacturedby PIONEER, PHILIPS, PANASONIC and others are currently being offered at pricesranging between 600 and 800 Euro. Much the same has happened with the

P A G E0 3 5

| || | | | |

STATU

S REPORT

| |

W O R L D D V D P R O D U C T I O N

Source: Understanding & Solutions, 2001

(Millions of discs)

2000

2001

2002

2003

2004

2005

2006

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0

P A G E0 3 6

related DVD-RW, DVD+RW and DVD-RAM discs. It is SINGULUS’ opinion that themulti-year dispute over competing formats appears to have been been resolved: the PHILIPS DVD+RW format has recently found the greatest acceptance. The format-transcending, universal application of SINGULUS systems, however, frees the Kahl am Main-based products from involvement in this dispute.

Soon billions of rewritable DVDs will need to be produced for which our customers’corresponding system capacities are a prerequisite. The chances of attaining a marketleadership position for high-end DVD technology are good. To date, SINGULUS hasinvested more in this systems business sector than in any other.

D V D R E C O R D E R (recordable, rewritable)

Source: One to One, 02-2003, Wall Street Journal

(Mio. Units)

2001

2002

2003

2004

2005

2006

90 80 70 60 50 40 30 20 10 0

P A G E0 3 7

| || | | | |

STATU

S REPORT

| |

> „ B L U - R AY “ PAV E S T H E WAY

The DVD in all its variations has accessed entirely new areas ofapplication for optical data storage. The innovative process is an ever-changing interplay between market needs and technological feasibility.

Within a few years, the High Definition Television format (HDTV), a high resolutionbroadcast process employing digital technology, will have become the standard inmajor industrial countries. Japan is the frontrunner in this sector but an end to analog TV is foreseeable in the U.S. as well, where programs in this market will bebroadcast exclusively in the HDTV format as of 2007. Storage for this volume of data customary for private video libraries, will require another quantum leap in theperformance of optical storage media.

An extremely short frequency laser beam (found in the blue range of the colorspectrum) is critical to the development of third-generation optical discs with storagecapacities of 27 Gigabytes per disc. In conjunction with new technology in data compression, the blue-violet, especially short-wave laser beam (with a frequency of405 nm), can bundle substantially more storage information in a small space than thered laser light (640 nm). Nine leading manufacturers of entertainment electronics -Hitachi, LG Electronics, Matsushita (manufactures the Technics and Panasonic brands),Philips, Pioneer, Samsung, Sharp, Sony, and Thompson - have laid the groundwork forthis new generation of discs. All nine have agreed upon a universal standard for thenew medium.

During the course of 2004, the first (presumably expensive) blu-ray format video recorders will appear on the market. Despite this, one cannot presume that its development will be tumultuous. The widespread application of blu-ray isdependent upon a change in additional technical standards. The global proliferationof HDTV, the development of new video recording cameras, the worldwide distributionof satellite cable TV, and a new generation of HDTV television sets are some of theprerequisites for this new technology.

P A G E0 3 8

SINGULUS TECHNOLOGIES is participating in the development of this new genera-tion of data storage in Japan. It is SINGULUS TECHNOLOGIES’ objective to capture the systems markets for this technology early on and contribute to the shaping of itsfuture.

> C O M P L E T E VA L U E - A D D E D C H A I N P R O M OT E S S Y N E R G Y

Relying on its in-house resources, SINGULUS quickly advanced from a componentssupplier to a complete line manufacturer. Through its strategic acquisition of EMOULD for injection molding machines and OMP for mastering systems, the company became the only single-source manufacturer in the world able to offerinterface-free, turnkey solutions for all optical disc replication formats. The fully electric EMOULD injection molding machines demonstrate the distinct advantagesthey have over competitors’ hydraulic brands for the demanding DVD technology.

The full earnings potential gained for the consolidated group of companies throughthe acquisition of EMOULD and OMP will be reflected in rising profits in the yearsahead.

> R E S E A R C H A N D D E V E L O P M E N T

R&D: The Core of SINGULUS TECHNOLOGIES AG. The spectrum of products in thecompany’s core business expanded rapidly in the past. The development of key technologies for new markets – DVD in all formats – was simultaneously enhanced.

In the fall of 2002, SINGULUS introduced a replication system to coincide with theanticipated breakthrough of SACD (Super Audio CD) in the music industry, a systemthat could also be utilized for DVD. The SACD format is of particular interest to themusic industry because, unlike the conventional CD, it provides effective widespreadcopyright protection.

P A G E0 3 9

| || | | | |

STATU

S REPORT

| |

At the close of 2001, the company resolved to lay the R&D groundwork for its entry into new business sectors. A new team of developers was assembled for thisexpress purpose. This occurred in complete conformity with company policy: Research and Development, along with Marketing and Service, comprise the company’s corecompetencies.

Over a year has passed since the MRAM project was officially launched. The assess-ment of this ambitious project is favorable: the 20-person TMR technology develop-ment team completed the TIMARIS prototype thin film deposition system during theyear in report. The milestones set at the beginning of the year have all been achieved.

The TIMARIS conceived by SINGULUS was designed for the semiconductor industryfrom the outset. It does not resort to older machine concepts but is instead „tailor-made“ for this application. All requirements outlined were taken into considerationduring the design phase. The TIMARIS has shown exceptional results based on all testsconducted thus far. As of the first quarter 2003, this system has applied sample layers to silicon wafers either for MRAM chips or for the new TMR thin film heads formagnetic hard disc drives.

> S U P E R A U D I O C D T E C H N O L O G Y

Music Industry Banks on SACD: The SACD replication line integrates two injectionmolding machines, a plasma surface treatment unit, two metallizers, a bonding station, a UV curing station, a lacquering unit, and an in-line inspection system into a complete turnkey replication system. The system attains cycle times of approx. 6 seconds per disc.

„This market launch is an important step for the continued dissemination of SuperAudio CD. All CD replicators now have an opportunity to follow this new trend andprofit from the tremendous potential this new Audio CD offers“, states Jos Bruins,Marketing Director for the new Super Audio format at Philips.

P A G E0 4 0

P A G E0 4 1

| || | | | |

STATU

S REPORT

| |

In a hybrid format, the Super Audio CD combines a standard CD information layer with a special high density DSD (Direct Stream Digital) layer. As a result, it iscompatible with any number of player combinations available to consumers. The CDlayer can be read on all CD players while the special DSD information layer hasrecently become playable on all standard DVD players, eliminating the former needfor special SACD players.

> S U P E R A U D I O C D T E C H N O L O G Y F O R T H E U L T I M AT E S T E R E O A N DM U LT I - C H A N N E L S O U N D E X P E R I E N C E .

The Super Audio CD developed by Philips and Sony is revolutionary compared to theconventional audio CD. It provides the ultimate stereo and multichannel surroundsound quality yet is still compatible with classic audio CD players.

The new DSD technology provides audiophiles with a superior sound experiencesince even the slightest nuances in live concerts, for example, are played back. Thetechnology accurately reproduces analog vibrations and in so doing, producesextremely clear and natural sound characteristics.

The Super Audio CD is endorsed by leading electronics manufacturers, professionalmusic companies and studios, music labels and disc replicators. Approximately 850SACD titles are already available on the market. A variety of sources have predictedthat the total number of titles available in 2003 will exceed the 2000 mark.P A G E

0 4 2

D V D - A U D I O / S A C D

Source: Medialine Intelligence

2001

2002

2003

2004

2005

2006

45 40 35 30 25 20 15 10 5 0 (Millions of discs)

> S A L E S A N D S E R V I C E : M A I N TA I N I N G G L O B A L A C T I V I T Y

As a corporation with an export rate of well over 90 %, maintaining a global customer presence has become a mandate. With its foreign subsidiaries and additionalnetwork of agents, SINGULUS maintains the most complex sales and service networkin the industry.

Even the activities of the recently acquired EMOULD and OMP companies have beenintegrated into this global network. The service presence for both companies has been reinforced internationally. Outside sales for OMP were strengthened in the coreU.S. and Asian markets. Investments in service and sales will provide the positive sales impetus to increase market share in the areas of mastering as well as electricinjection molding machines.

Following the lead of major customers, SINGULUS established new service offices in Mexico and Poland. Today the company is able to provide first-class on-site service in those locations. Additional sales and service subsidiaries were established in Scandinavia and Bulgaria. The joint venture company SINGULUS Vika China hasalso opened another office in Shanghai.

SINGULUS TECHNOLOGIES is now represented globally by the following subsidiaries:

> SINGULUS EMOULD GmbH, Würselen, Germany> SINGULUS OMP B.V., Best, Netherlands> OMP International GmbH, Schaffhausen, Switzerland> 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 TECHNOLOGIES FRANCE, Valence, France> SINGULUS TECHNOLOGIES ITALIA s.r.l., Senigallia (Ancona), Italy> SINGULUS VIKA CHINA Ltd., Wanchai, Hong Kong

With the exception of SINGULUS VIKA CHINA Ltd. (51 % share), the corporation directly or indirectly controls all shares of the aforementioned companies. Agentshave also been established in the following regions in Europe in Benelux, Bulgaria,Czech Republic, Greece, Poland, Sweden, Finland, Norway, Turkey and in Asia in HongKong, India, Japan, Korea, Taiwan, Thailand.

P A G E0 4 3

| || | | | |

STATU

S REPORT

| |

> C A PA C I T Y E X PA N S I O N

SINGULUS TECHNOLOGIES AG expanded its floor space in Kahl am Main. The addition of a 1000 m2 north wing to the building was begun in June 2002 and completed by January 2003. It serves to expand the technology company’s develop-ment and engineering departments. The community of Kahl quickly approved the construction plans. The addition provides the company with the spatial prerequisitesfor continued growth as well as the announced build-up of new business sectors.

SINGULUS TECHNOLOGIES simultaneously used a 1999 option to purchase additional acreage from the town in order to access sufficient building space forfuture expansions. Having outgrown its former Alzenau headquarters, SINGULUSTECHNOLOGIES moved into its new 14,000 m2 facility in Kahl in July 2000.

> S TA F F

An innovative spirit, internationalism, customer orientation, and quality awarenesson the part of its employees are hallmarks of the company. In preceding years SINGULUS TECHNOLOGIES further strengthened its sales and product management.The company has devoted special attention to its key customers. The intense dialogconducted with these customers over the years is not the least of the reasons that led SINGULUS to its global market leadership position.

P A G E0 4 4

700 600 500 400 300 200 100 0

1999

2000

2001

2002

S TA F F

212

319

367

502

On December 31, 2002, SINGULUS TECHNOLOGIES employed 502 people, 36.8 %more than in the preceding year. At 39 and 65 employees respectively, the newly-acquired OMP and EMOULD companies contributed significantly to the company’scapacity expansion. The company leads Germany with its exceptionally high per capita earnings of 648.111 Euro. With an average sick time rate of 2.81 %, the company remains far behind the German average of 4.01 %.

203 employees (40.4 % of total staff) were employed by our foreign subsidiaries asof the year-end closing date. The average age of the staff at the Kahl headquarters is 35. More than 30 % of our employees hold academic degrees.

> M A N A G I N G B O A R D C H A N G E S

In both the fall of 2002 and January 2003, two positions in the three-personManaging Board changed hands. During its meeting on September 2, 2002, theSupervisory Board appointed Dipl.-Ing. Klaus Hammen (35) to the Managing Board.He suceeded Reiner Seiler (63), who retired following five years of service on theManaging Board and the expiration of his contract on October 31, 2002. Reiner Seilerco-founded SINGULUS TECHNOLOGIES GmbH with Roland Lacher and other financialinvestors in June 1995. His fair market product policies during the Seiler era led to anexpansion of business activities increasing the company’s revenues from 45 millionEuro revenues in 1996 to 290.5 million Euro in 2002.

Klaus Hammen assumed responsibility for the R&D, Sales and Marketing depart-ments. His promotion represents a rise to the Managing Board from within the ranksof the company. Mr. Hammen studied mechanical engineering at the TechnicalUniversity of Munich and was initially employed by two companies, first as a development engineer and then as engineering manager. After joining SINGULUS TECHNOLOGIES in February 2000 he became Technical Director of Engineering,Production and Logistics. In mid-2002 he also assumed the position of President ofSINGULUS EMOULD GmbH, Aachen, which was acquired at the beginning of the year.

Effective January 15, 2003, Stefan A. Baustert (46), who holds a graduate degree inbusiness, was appointed CFO and is responsible for Finance, Administration and HumanResources, succeeding Dr. Christian Holtmann who resigned on 12/31/02. StefanBaustert began his career in the finance division of Thyssen AG. In 1994 he wasappointed Director of Finance at Thyssen Telecom AG and in 1997 was named CFO at E-Plus.

P A G E0 4 5

| || | | | |

STATU

S REPORT

| |

> R E V E N U E S A N D E A R N I N G S

SINGULUS TECHNOLOGIES’ 2002 revenues and earnings increased significantly overthe prior year. The sale of prerecorded DVD replication lines in particular, ie., the SINGULUS Spaceline product, grew considerably over the prior year. Thus the numberof units sold rose from 79 in 2001 to 182 in 2002. This corresponds to an 87 millionEuro growth in revenue. Digital DVD has unequivocally replaced the video cassette inGermany with a market share in 2002 of well over 50 %. SINGULUS achieved marketleadership in this segment of the market with over 65 % market share.

SINGULUS has further enhanced the depth of its manufacturing. In addition to the 2001 acquisition of the injection molding machine manufacturer EMOULD, the Dutch company OMP was purchased in 2002. OMP manufactures so-called mastering systems. Disc masters for all available CD and DVD formats can be produced with these systems. Included in the consolidated revenues for the first time as of 1/1/02,OMP generated revenues of 15.7 million Euro and net income of 1.7 million Euro.

This acquisition unites SINGULUS TECHNOLOGIES’ prior business sector for opticaldisc replication systems with the critical preceding mastering process. The completionof the entire value-added chain provides a significant strategic advantage for all current and future disc formats.

P A G E0 4 6


1999

2000

2001

2002

177,3

375,7

225,5

290,5

400 350 300 250 200 150 100 50 0

> D V D AT T H E F O R E F R O N T

The continued shift in manufacturing from CD to DVD replication lines continued in2002. DVD lines accounted for 58.9 % of total revenues in 2002. The percentage ofbusiness attributable to Service and Spare Parts totaled 9.9 % while metallizer businesscontinued to decline.

> A S I A N S A L E S P E R C E N TA G E D E C L I N E S

The percentage of revenues earned by SINGULUS in Asia shrank from 44 % in 2001to 29 %. In contrast, North and South America demonstrated positive gains, that rosefrom 23 % to 34 %. Europe attained 37 % (prior year 33 %), 6 % of which was earnedin Germany (previous year 7%).

P A G E0 4 7

| || | | | |

STATU

S REPORT

| |

S A L E S P E R R E G I O N

■ Asia

■ America

■ Rest of Europe

■ Germany

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

2001

2002

44 23 26 7

29 34 31 6

S A L E S S P L I T BY P R O D U C T G R O U P

OMP-Mastering

EMOULD Moulding Machines*

MODULUS / SUNLINE

SPACELINE

SKYLINE

STREAMLINE (CD-R / DVD-R)

Metallizer

11

9

2

182

134

14

32

* (OEM + 171 Machinesto SINGULUS TECHNOLOGIES)

> P R O F I B I L I T Y U N I M P E D E D

SINGULUS was able to achieve a gross margin of 35.9 % in fiscal 2002 (prior year34.8 %). This figure reflects the corporation’s ability to appropriately reduce manufac-turing costs even in the face of increasing competitive pressures in the market. Theproduct mix of systems sold, which now includes a higher percentage of DVD lines, was another advantageous factor in the development of strong margins.

Earnings Before Income Tax (EBIT) totaled 52.7 million Euro (40.2 million Euro theyear before). As in the prior year, the EBIT return totaled 18.9 %. The company’s efficient cost structure is an important aspect of SINGULUS TECHNOLOGIES’ successand one which is shared by our subsidiaries.

The financial results for 2002 total 1.8 million Euro (2.2 million Euro the prior year).The average liquidity as well as the average interest rate for invested funds fell slightlyshort of the prior year’s figures. Pre-tax earnings totaled 54.5 million Euro (prior year42.4 million Euro). This led to a a pre-tax yield of 19.6 % (prior year 19.9 %).

The tax rate for the year in report is 32.9 % (previous year 34.2 %). SINGULUSachieved annual profits of 36.6 million Euro in 2002 (27.9 million Euro the year before).At 13.1 % (13.1 % prior year), the net return after taxes remains exceptionally high.

P A G E0 4 8


1999

2000

2001

2002

100 90 80 70 60 50 40 30 20 10 0

44,8

93,4

40,2

52,7

> O R D E R B A C K L O G A N D B O O K I N G S

SINGULUS entered fiscal 2002 with an order backlog of 55.7 million Euro. Orderintake for the year in report totaled 293.3 million Euro. Business developments andyield for 2002 are similarly reflected in a solid asset and liability and capital structure.By the 12/31/02 year-end closing date, the balance sheet total grew 75.7 million Euroover the prior year.

> F I X E D A S S E T S

Fixed assets rose from 13.0 million Euro to 31.6 million Euro.

Of this, 14.6 million Euro were attributable to purchased fixed assets (prior year 9.3 million Euro). With a net growth of 5.3 million Euro in fixed assets, 2.5 millionEuro were spent on the initial consolidation of OMP and 1.1 million Euro on thebuilding expansion in Kahl and factory and office equipment.

Intangible assets rose from 3.7 million Euro to 17.0 million Euro. This growth essentially represents the activation of goodwill in connection with the purchase ofOMP.

Depreciation for tangible and intangible fixed assets totaled 3.5 million Euro.

P A G E0 4 9

| || | | | |

STATU

S REPORT

| |



■ Net Income

1999

2000

2001

2002

100 90 80 70 60 50 40 30 20 10 0

48,794,7

27,942,5

36,654,5

23,845,5

> B A L A N C E S H E E T A N D E A R N I N G S U T I L I Z A T I O N

Current assets including long-term accounts receivable rose by 56.6 million Euroover that of the preceding year, with 17.0 million Euro of that attributable to theinitial consolidation of OMP.

Other growth is principally attributable to trade accounts receivable which totaled71.2 million Euro by year-end. The increase over the prior year’s figures (61.2 millionEuro) is due primarily to the initial consolidation of OMP. Otherwise accounts receivable developed analogous to the business. Liquid assets totaled 53.9 million Euro on 12/31/02. Once again, SINGULUS TECHNOLOGIES remained bank liability free in 2002.

Compared to 12/31/01, the inventory value for the SINGULUS consolidated group rose by 32.1 million Euro. Excluding the initial consolidation of our Dutch subsidiaryOMP, this figure totals 27.7 million Euro. It also contains replication lines for demopurposes in our subsidiaries and at the Kahl headquarters. The remaining growth isrevenue-based, due in large part to the production volume at SINGULUS EMOULDwhich is considerably higher than last year.

Short-term liabilities rose from 48.9 million Euro last year to 77.8 million Euro.Significant changes resulted in an increase of 11.0 million Euro in trade payables aswell as a rise of 8.4 million Euro in short-term liabilities. Discounts were utilizedwhenever possible. Customer down payments rose by 3.6 million Euro and otheraccrued liabilities increased by approximately 0.9 million Euro.

Long-term liabilities include pension accruals and liabilities from convertible bonds.They rose slightly from 3.4 million Euro to 3.9 million Euro during the period in report.

Overall, total liabilities rose 29.5 million Euro over the prior year to 81.7 millionEuro.

P A G E0 5 0

> E Q U I T Y R AT I O

The company’s equity capital grew from 135.4 million Euro last year to 181.6 millionEuro, primarily as a result of the annual 36.6 million Euro net profit, bringing theequity ratio to 69.0 % (prior year 72.2 %). The return on equity (the relationshipbetween pre-tax profits and equity capital) totals 30 % (prior year 31.3 %). Thismeans SINGULUS holds an exceptionally strong position in terms of asset and capital.

In accordance with German law, the recommendation for the utilization of earningswas based on the individual year-end closing for SINGULUS TECHNOLOGIES AG. Inaccordance with § 16.3 of the statutes, half of the 24.9 million Euro annual net profit will be converted to other retained earnings. The remaining 12.45 million Euroin profits will also be rolled into “other retained earnings” in accordance with a resolution passed at the Annual Shareholders’ Meeting. The earnings per shareDVFA/SG are 1.01 Euro.

> C O N T I N U E D R E T E N T I O N S T R E N G T H E N S O U R F U T U R E

SINGULUS TECHNOLOGIES will continue to utilize its earned capital to sustain internal growth and in-house development and will also seize the opportunities presented in the market. The company’s future growth and earning power can only be secured through a retention of earnings. We were able to utilize these policies in the past to swiftly acquire two excellent companies without noticeably affectingour liquidity. This measure of freedom will also be needed in the future to benefit the corporation and its shareholders. P A G E

0 5 1

| || | | | |

STATU

S REPORT

| |

2001 2002

■ Cash

■ Total accountsreceivable

■ Total propertiesassets(without long term receivables)

■ Total inventories

■ Others

■ Short term liabilities

■ Long term liabilities

■ Total sharehoders equity

187.7 263.3 Total assets

48.9

77.8

83.4

31.6

88.8

53.9

65.5

13.0

56.7

47.4

2001 2002

5.65.0187.7 263.3 Total liabilities and equity

L I A B I L I T I E S A N D E Q U I T Y (in Mio. EUR)A S S E T S (in Mio. EUR)

3.4

135.4

3.9

181.6

> C A P I TA L E X P E N D I T U R E S A N D F I N A N C I N G

As in years past, nothing about the SINGULUS business model changed during 2002.The development of replication lines remains our core competence. The acquisitions of SINGULUS EMOULD at the end of 2001 and SINGULUS OMP in early 2002 do notalter that fact. The acquisition of these companies has successfully added depth, i.e. a degree of completion (OMP), to our value-added chain.

The capital expenditures for fixed assets totaling 9.2 million Euro (gross) are primarily made up of customer-leased finished goods, factory and office equipment,the building expansion in Kahl as well as MRAM measuring devices and other technical equipment. The 2.5 million Euro growth is attributable to the initial consolidation of OMP.

As in preceding years, capital expenditures made in 2002 were financed by operative cash flow.

> C A S H - F L O W

In fiscal 2002 the corporation’s cash flow increased 8.7 million Euro to 38.3 millionEuro, up from 29.6 million Euro. The working capital (liquid assets minus short-termliabilities) rose by 17.3 million Euro. This growth can be principally attributed to a29.3 million Euro increase in inventories. The opposite effect applied to short-termliabilities. The company’s net indebtedness is zero.

P A G E0 5 2


1999

2000

2001

2002

50 45 40 35 30 25 20 15 10 5 0

25,65

49,96

29,60

38,30

Fixed assets, financial investments and the growth in working capital were financedthrough the company’s operating cash flow. Liquid assets grew by 6.5 million Euro,totaling 53.9 million Euro by year-end closing.

The increase in inventory assets is due in part to the increased business volume andthe initial consolidation of OMP.

> R I S K R E P O R T / K o n T r a G

As a result of our global activities, we are exposed to isolated risks that must bemonitored. With an export share of over 90 % there are political risks, for example,that are difficult to ascertain. However, even the economic developments in individualexport countries should be monitored carefully. Some of these risks are reflected inthe receivables appearing on our balance sheet. It is imperative that these residualrisks are managed. This can be accomplished through tireless vigilance and hedgingrisks whenever possible.

Additionally, there are future-oriented business risks dependent on competition oreven originating in rapid technological developments.

The markets for CD and DVD products progress quite differently. While CD replica-tion lines were best-sellers in our portfolio in 2000, DVD replication lines now occupythis spot and may tomorrow be held by DVD recordable or rewritable lines. Not onlymust we keep pace with technological developments, we must outperform our competition. Our team is staffed with experts engaged specifically with developmentsexpected in the market. Our MRAM machine is one consequence of this market identification.

SINGULUS is still fundamentally set up to quickly react to unexpected market riskssince we have kept fixed costs low. In this regard, capacity risks can be absorbed.

The principle of securing currency exchange rates still applies as it pertains to currency risks arising from foreign currency bilings. We do not wish to add currencyrisks to our normal business risks. In terms of procurement, our needs are securedthrough appropriate long-term frame contracts. Quality audits are conducted to prevent quality risks posed by suppliers.

P A G E0 5 3

| || | | | |

STATU

S REPORT

| |

The KonTraG regulations have been satisfied to their full extent. Along with ourauditors and Supervisory Board, we have examined the instruments with which wemonitor risk. They satisfactorily and in a timely fashion identify the risks endangeringthe company.

In concert with our auditors we will continue to further our risk management sys-tem in 2003. No risks threatening the survival of the corporation could be identifiedthis year or for the foreseeable future.

> E N V I R O N M E N TA L LY R E S P O N S I B L E T H I N K I N G

Long-term eonomic success is only possible if continuous improvements are madeto all economic, ecological and social services. Attentive controlling of risks, includingenvironmental risks, is a significant factor for the company’s success.

The company has an external representative who advises the organization of itslegal obligations as they pertain to the environment. Not only are the new office andproduction facilities in the company’s Kahl/Main headquarters in compliance withlegal requirements for environmental protection and workplace safety, they exceedthe most modern building code regulations.

> C O R P O R AT E G O V E R N A N C E A T S I N G U L U S T E C H N O L O G I E S

The term „corporate governance“ represents leadership and control of organizationsfocused on long-term value enhancement. The respect for shareholders’ interests, efficient cooperation between Managing and Supervisory Boards as well as opennessand transparency are central to this view.

Since going public in 1997, SINGULUS TECHNOLOGIES has always placed great valueon this understanding of responsible corporate leadership. Therefore, no significantadjustments to the rules of conduct established in the German Code of CorporateGovernance were necessary.

P A G E0 5 4

The Managing and Supervisory Boards as well as managers at SINGULUS TECHNOLOGIES identify with the principles and policies of transparent and responsibleleadership as well as control of the company. These criteria serve to sustain andincrease the confidence of shareholders, employees, business partners and the generalpublic.

An intense, continual dialogue between Managing and Supervisory Boards is thebasis for the efficient admininstration of a company. The Managing Board regularlyprovides the Supervisory Board with extensive and timely information on all relevanttopics pertaining to corporate planning, the state of the company including risk conditions and risk management. Departures from the established business plans andgoals are addressed in detail. The strategic direction to be taken by the company iscontinually and extensively discussed with the Supervisory Board.

P A G E0 5 5

| || | | | |

STATU

S REPORT

| |

> C O D E O F C O R P O R AT E G O V E R N A N C E

The German Code of Corporate Governance seeks to promote confidence in theadministration and controlling of publicly-held companies in Germany among international and domestic stockholders, customers, employees and the general public. The code summarizes fundamental legal requirements for the administrationand control of publicly-held corporations. It addresses international and nationallyaccepted standards of conduct in the form of recommendations (should), and provides individual companies with the incentive (should/can) for positive and responsible administration and control.

> S I N G U L U S T E C H N O L O G I E S S TO C K

D E C L I N E I N S I N G U L U S S TO C K I N 2 0 02 . . . ,

Marked by noticable downward trend, 2002 turned out to be an extremely difficultyear on the stock market for most German companies. Securities on the Neuer Marktsegment of the stock exchange generally suffered a sharp decline from which SINGULUS was similarly unable to escape. Following a 34.55 Euro high for the year in April 2002, the stock was valued at only 12.60 Euro by year-end.

After publication of the 2002 mid-year figures and despite extensive teleconferencecalls with financial analysts, the share price dropped substantially within a few days. In response, the SINGULUS TECHNOLOGIES AG Managing Board expressed their position on fundamental corporate strategy and development in a letter to shareholders entitled “SINGULUS TECHNOLOGIES – A Successful Strategy for Earnings and Growth”: this published offensive and optimistic stance with respect to SINGULUS’ growth and earnings prospects, remains in effect.

. . . L O S S L E S S T H A N O V E R A L L M A R K E T

During the course of the year, the Nemax 50 dropped 69 %. SINGULUS TECHNOLGOIES stock was unable to escape this trend. Although the company’s performance in 2002 was better than 2001, the stock price more closely followed thecourse of the Index. The overall uncertainty in world markets depressed even stablecompanies demonstrating good performance and financial relations. Accordingly, theSINGULUS TECHNOLOGIES stock dropped 60 % from its previous year-end position.

P A G E0 5 6

15

20

25

EUR35

S I N G U L U S T E C H N O L O G I E S S TO C K I N C O M PA R I S O N

– SINGULUS Stock

– Nemax 50

01.01.02 Feb. Apr. Jun. Aug. Oct. Dec. Feb. 26.03.03

Stock exchange: Frankfurt

ISIN: DE0007238909

Master data: 723890

Stock symbol: SNG / Reuters SNGG.DE / Bloomberg SNG.NM

Type of shares: Ordinary bearer shares for 1 EUR

Issued share capital: 36,947,226

Nomical capital: EUR 36,947,226

Indices: NEMAX 50, NEMAX-All-Share, TecDAX

Dow Jones STOXX SM 600

NEMAX-Segment indices: Technology

Prime Standard: Technology

Freefloat, approx.: > 90 %

Shares per 31.12.2002: 36,947,226

Market Cap per 31.12.2002: 464,6 Mio. EUR

Annual low 2002: 10,60 EUR

Annual high 2002: 34,55 EUR

Trade volumina, Ø Xetra: 159.966 pieces

Trade volumina, Ø Parkett: 46.282 pieces

KGV (31.12.2002): 12,76

Earnings per share DVFA/SG in EUR: 1.01

The SINGULUS stock is actively traded on a daily basis on all German stockexchanges including Xetra internet trading. With an average daily trading volume of159.966 in Xetra and 46,282 on the floor of the exchange in 2002, the SIGNULUSstock ranks among the most-frequently traded securities on the Neuer Markt. With afree float of over 90 %, it is considered to be one of the most liquid assets listed.

Market capitalization at the end of the period in report totaled 464.6 million Euro.The price-earnings ratio for the same fiscal 2002 period is calculated at a factor of12.76. Earnings per share rose to 0.99 Euro (DVFA/SG 1.01 Euro) in 2002, up from 0.77 Euro in 2001.

> N E W B E G I N N I N G S

In September 2002, the German Stock Exchange announced its plans to radicallyrestructure branches of the stock market, disbanding the Neuer Markt and Smax trading segments.

This surprising measure taken by the stock exchange was in response to the drasticdecline in the market precipitated by a loss of confidence in the Neuer Markt.Following a transition period, the Neuer Markt will close at the end of 2004.

S TO C K K E Y F I G U R E S

P A G E0 5 7

| || | | | |

STATU

S REPORT

| |

At the start of 2003 the German stock exchange was divided into two new segments, the „Prime Standard“ and the „General Standard“. By creating the PrimeStandard, the stock exchange established a quality segment offering investors transparency comparable to the Neuer Markt and intended to simplify corporateaccess to international capital markets. SINGULUS TECHNOLOGIES has already beenadmitted to the Prime Standard.

> S I N G U L U S I N T H E T e c D A X

Technology companies will have a new technology index, the TecDAX. It representsthe 30 largest technology stocks and is also expected to gain international recogni-tion. The SINGULUS TECHNOLOGIES stock was officially included as a major player inthe TecDax in February.

ABN Amro Bank AG

B. Metzler Seel. Sohn & Co.

Bank Vontobel AG

Bankhaus Julius Bär AG

Bankhaus Hermann Lampe

Bayerische Landesbank

Berenberg Bank

Berliner Bankgesellschaft

BNP Paribas

BW Bank

Commerzbank AG

Commerzbank Securities

CA Indosuez Cheuvreux

CSFB Credit Suisse First Boston

Delbrück & Co. Privatbankiers

Deutsche Bank AG

Deutsche Bank Research

DZ BANK

Dresdner Kleinwort Wasserstein

Fortis Bank

Helaba Trust

HSBC Trinkaus & Burkhardt KG

Hypo Vereinsbank

Independent Research

ING Financial Markets

Julius Baer Brokerage

Landesbank Baden-Württemberg LB BW

Mainfirst Bank AG

Metzler Equity Research

Morgan Stanley

Sal. Oppenheim

SBC Warburg Dillon Read

SG Securities

SES Research GmbH

UBS Warburg

West LB Panmure

P A G E0 5 8

A N A LY S T - C O V E R A G E

> AWA R D - W I N N I N G I N V E S TO R R E L AT I O N S

SINGULUS TECHNOLOGIES maintains close contact with its shareholders andinvestors. Its participation in technology conferences and roadshows as well as thenumerous individual conversations, press conferences and analyst presentations held,document this.

The information offered on the Investor Relations page on the SINGULUS website iscontinually updated. A variety of institutions awarded the company’s IT work in 2002:

1st Place: Best Investor Relations by a Growth Market Company 20021st Place: Best Management of Disclosure Policy 2002 Non Euro 100 2nd Place: Capital Investor Relations Award 2002, „Neuer Markt“ Segment3rd Place: German Investor Relations Award 2002, Focus Money

> C O N T I N U E D S T R O N G A N A LY S T C O V E R A G E

The number of analyst reports run on SINGULUS remains high although the bankshave downsized staff in this sector. The opinions expressed by financial analysts is animportant factor in the decisions made by private and institutional investors.

The number of financial institutes conducting studies on SINGULUS is just as highas it was last year.

P A G E0 5 9

| || | | | |

STATU

S REPORT

| |

> P O S T - 1 2 / 31 / 2 0 02 E V E N T S A N D F O R E C A S T 2 0 0 3

Stefan A. Baustert (46), who holds a graduate degree in business, assumed reponsi-bility for the Finance, Administration, and Human Resources sectors of SINGULUSTECHNOLOGIES AG effective January 15, 2003. He also will be responsible for InvestorRelations.

Our business demonstrated an irrepressible vitality in 2002 despite the political andeconomic instability in the world. Projects progressed seamlessly from last year intothe first quarter of this year and were focused primarily on systems for the variousDVD formats.

P A G E0 6 0

Asian countries, led by Taiwan and China, will invest even more than in 2002. Longexpected, this affects the business sectors for recordable and rewritable DVD but notexclusively. It is gratifying to note that production capacities for CD and CD-R areapparently being expanded as well, indicating a new cycle of growth in these areas.

In order to increase productivity and meet future market demand, the machine andprocess technology of our systems must undergo intense development. Our customersoperate in fiercely competitive markets with short innovation cycles in which good margins cannot be sustained. As a systems manufacturer, it therefore becomesimperative that we supply the market with innovative machine developments aheadof our competitors.

Building upon a value-added chain for the manufacture of all optical disc formatsunique in our industry, we will utilize the new opportunities in the recordable andrewritable DVD sectors and thus be able to capture additional markets. Overall, this will help our company achieve renewed growth, particularly as initial revenuesare expected in the business sector for TMR thin film deposition systems.

Kahl am Main, 28.02.2003THE MANAGING BOARD

Roland Lacher Klaus Hammen Stefan A. Baustert

P A G E0 6 1

| || | | | |

STATU

S REPORT

| |

2C O N S O L I D AT E D R E P O R T

0 0 2

Year End Closing for SINGULUS TECHNOLOGIES Consolidated as of 12/31/02 . . . . . . . . . . . . . . . . Page 062

Report of Independent Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 064

Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 066

Consolidated Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 068

Consolidated Statements of Shareholders’ Equity . . . . . . . . . . . . . . . . . . . . . Page 069

Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 070

Consolidated Fixed Assets Movement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 072

Notes to Consolidated Finincial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . Page 074

Annual Report 2002 HGB as of 12/31/02 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 103

Balance Sheets of SINGULUS TECHNOLOGIES AG . . . . . . . . . . . . . . . . . . . . . Page 104

Statements of Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 106

Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Page 108

P A G E0 6 4

> R E P O R T O F I N D E P E N D E N T A U D I TO R S

“We have audited the consolidated financial statements, comprising the balancesheet, the income statement and the statements of changes in shareholders’ equity and cash flows as well as the notes to the financial statements, prepared bySINGULUS TECHNOLOGIES AG, Kahl am Main, for the fiscal year from January 1to December 31, 2002. The preparation and the content are the responsibility ofthe Company's management. Our responsibility is to express an opinion whether the consolidated financial statements are in accordance with the US-GAAP, basedon our audit.

We have conducted our audit of the consolidated financial statements inaccordance with the German audit regulations and the generally accepted Germanstandards for the audit of financial statements promulgated by the IDW [“Institutder Wirtschaftsprüfer in Deutschland”: Institute of Public Auditors in Germany].Those standards require that we plan and perform the audit such that it can beassessed with reasonable assurance whether the consolidated financial statementsare free of material misstatement. Knowledge of the business activities and theeconomic and legal environment of the Group and evaluations of possible misstate-ments are taken into account in the determination of audit procedures. The evi-dence supporting the amounts and disclosures in the consolidated financial state-ments are examined on a test basis within the framework of the audit. The auditincludes assessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall presentation of the consolidatedfinancial statements. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements give a true and fair view of the net assets, financial position, results of operations and cash flows of theGroup for the fiscal year in accordance with US-GAAP.

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 REPORT O

F IND

EPEND

ENT A

UD

ITORS

P A G E0 6 5

Our audit, which also extends to the management report of the Company andthe Group prepared by the management board for the fiscal year from January 1to December 31, 2002, has not led to any reservations. In our opinion, on thewhole the management report of the Company and the Group together with theother disclosures in the consolidated financial statements provides a suitableunderstanding of the Group’s position and suitably presents the risks of futuredevelopmentour. In addition, we confirm that the consolidated financial state-ments and the management report of the Company and the Group for the fiscalyear from January 1, 2002 to December 31, 2002 satisfy the conditions required for the Company’s exemption from its obligation to prepare consolidated financialstatements and the group management report in accordance with German law.”

Eschborn/ Frankfurt am Main, February 28, 2003

Ernst & YoungRevisions- und Treuhandgesellschaft mbHWirtschaftsprüfungsgesellschaftSteuerberatungsgesellschaft

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

P A G E0 6 6

Dec. 31, Dec. 31, Note 2002 2001

No. KEUR KEUR

Cash and cash equivalents (4) 53,915 47,431

Trade accounts receivable, net (5) 52,995 57,203

Other receivables and other assets (5) 12,169 4,264

Total accounts receivables, net 65,164 61,467

Raw and packing materials 24,696 24,510

Work in process 62,481 31,124

Prepayments to suppliers 1,672 1,067

Inventories, net (6) 88,849 56,701

Total current assets 207,928 165,599

Trade accounts receivable, net (long-term) 18,248 4,011

Property, plant and equipment, net 14,577 9,321

Goodwill and other intangible assets, net 17,034 3,701

Total non-current assets 49,859 17,033

Deferred tax assets (13) 5,562 5,030

Total assets 263,349 187,662

Consolidated Balance Sheets as of December 31, 2002 and 2001Assets

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 CON

SOLID

ATED

BALA

NCE SH

EETS

P A G E0 6 7

Dec. 31, Dec. 31, Note 2002 2001

No. KEUR KEUR

Trade accounts payable 25,521 14,495

Other current liabilities (7) 18,367 9,957

Progress payments (7) 11,984 8,427

Tax accruals (13) 10,291 5,284

Other accruals (9) 11,645 10,731

Total current liabilities 77,808 48,894

Convertible bonds (7) 1,147 1,179

Pension accruals (8) 2,763 2,183

Total long-term liabilities 3,910 3,362

Total liabilities 81,718 52,256

Share capital (36,947,226 and 36,436,440, respectively, authorized, issued and outstanding ordinary shares) (10) 36,947 36,436

Additional paid-in capital (10) 26,950 15,197

Retained earnings 119,257 82,668

Accumulated other comprehensive income –1,523 1,105

Total shareholders’ equity 181,631 135,406

Total liabilities and sharholders’ equity 263,349 187,662

Consolidated Balance Sheets as of December 31, 2002 and 2001Liabilities

P A G E0 6 8

Consolidated Statements of Income for the years ended December 31, 2002 and 2001

Note Dec. 31, 2002 Dec. 31, 2001No. KEUR % KEUR %

Gross revenues (15) 290,548 104.2 225,525 105.7

Sales deductions and direct distribution cost – 11,748 – 4.2 – 12,254 – 5.7

Total net revenues 278,800 100.0 213,271 100.0

Cost of goods sold – 178,651 – 64.1 – 139,007 – 65.2

Gross profit 100,149 35.9 74,264 34.8

Research and development – 16,155 – 5.8 – 8,307 – 3.9

Sales and customer services – 16,673 – 6.0 – 11,268 – 5.3

General management and administration – 9,760 – 3.5 – 6,993 – 3.3

Other operating income/(expenses) – 4,820 – 1.7 – 7,469 – 3.5

Total operating expenses – 47,408 – 17.0 – 34,037 – 16.0

Operating income (EBIT) 52,741 18.9 40,227 18.9

Interest income (net of interest expense) (12) 1,780 0.6 2,221 1.0

Income before tax 54,521 19.6 42,448 19.9

Income tax (13) – 17,932 – 6.4 – 14,513 – 6.8

Net income 36,589 13.1 27,935 13.1

Other comprehensive income:

Currency translation adjustment – 2,485 359

Minimum pension liability adjustment, net – 143 0

Comprehensive income 33,961 28,294

Earnings per share – basic (in EUR) 0.99 0.77

Earnings per share – diluted (in EUR) 0.95 0.74

Weighted average shares outstanding – basic 36,792,112 36,361,342

Weighted average shares outstanding – diluted 38,589,372 37,941,709

CON

SOLID

ATED REPO

RT 2002 CON

SOLID

ATED STATEM

ENTS O

F INCO

ME A

ND

SHA

REHO

LDERS’ EQ

UITY

P A G E0 6 9

Accu-mulated

Addi- other Totaltional compre- share-

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

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

Capital increase 115 513 628

Currency translation adjustment 359 359

Net income 27,935 27,935

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

Capital increase 511 11,753 12,264

Minimum pension liability adjustment, net – 143 – 143

Currency translation adjustment – 2,485 – 2,485

Net income 36,589 36,589

Balance at December 31, 2002 36,947 26,950 119,257 – 1,523 181,631

Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2002 and 2001

P A G E0 7 0

Dec. 31, 2002 Dec. 31, 2001KEUR KEUR

Cash flows from operating activities

Net income 36,589 27,935

Adjustments to reconcile net income to net cash provided by operating activities

Depreciation 2,878 2,084

Additions to pension accrual 394 264

Other non-cash expenses/income – 1,376 – 176

Deferred taxes – 217 1,679 – 502 1,670

38,268 29,605

Changes in operating assets and liabilities

Trade accounts receivable, net – 756 – 71

Other receivables and other assets – 6,940 174

Inventories, net – 29,309 31,452

Trade accounts payable 8,196 – 11,723

Other current liabilities 4,888 – 3,373

Progress payments 3,096 – 6,805

Tax accruals 4,381 – 24,571

Other accruals – 875 – 17,319 1,592 – 13,325

Net cash provided by operating activities 20,949 16,280

Consolidated Statements of Cash flows for the years ended December 31, 2002 and 2001

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 CON

SOLID

ATED

STATEM

ENTS O

F CASH

FLOW

S

P A G E0 7 1

Dec. 31, 2002 Dec. 31, 2001KEUR KEUR

Cash flows from investing activities

Purchase of fixed assets – 5,265 – 4,504

Disposal of fixed assets 1,175 2,547

Cash paid for the acquisition of consolidatedlcompanies less cash acquired – 11,253 – 15,343 – 9,828 – 11,785

Net cash used in investing activities – 15,343 – 11,785

Cash flow from financing activities

Decrease in bank overdrafts and borrowings 0 – 41

Increase in convertible bonds 348 743

Capital increase 864 1,212 804 1,506

Net cash used in investing activities 1,212 1,506

Net increase in cash and cash equivalents 6,818 6,001

Effect of foreign currency exchange rate changes – 334 0

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

Cash and cash equivalents, ending balance 53,915 47,431

Supplemental cash flow disclosures

Cash paid for interest 253 595

Cash paid for income taxes 22,498 40,260

Consolidated Statements of Cash flows for the years ended December 31, 2002 and 2001

P A G E0 7 2

Acquisition and production costCurrency

Reclassifi- TranslationJan. 1, 2002 Additions Disposals cations Differences

KEUR KEUR KEUR KEUR KEUR

Property, plant and equipment

Land, land rights and buildings including buildings on third party land 3,421 2,792 0 0 0

Technical equipment and machines 616 262 7 0 0

Other equipment, factory and office equipment 5,619 2,335 830 0 – 277

Equipment under operating leases 3,645 2,774 611 0 0

Payments on account and assets under construction 0 1,097 0 0 0

13,301 9,260 1,448 0 – 277

Intangible assets

Concessions, industrial and similar rights and assets and licenses in such rights and assets 984 215 0 0 0

Intangible pension asset 208 0 17 0 0

Goodwill 3,217 13,322 0 0 0

4,409 13,537 17 0 0

17,710 22,797 1,465 0 – 277

Consolidated fixed assets movement schedule for fiscal year 2002

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 CON

SOLID

ATED

FIXED A

SSETS MO

VEMEN

T

P A G E0 7 3

Accumulated depreciation Net book valuesCurrency

TranslationDec. 31, 2002 Jan. 1, 2002 Provisions Reversals Differences Dec. 31, 2002 Dec. 31, 2002 Dec. 31, 2001

KEUR KEUR KEUR KEUR KEUR KEUR KEUR KEUR

6,213 183 401 0 0 584 5,629 3,238

871 200 148 0 0 348 523 416

6,847 2,933 1,102 234 – 121 3,680 3,167 2,686

5,808 664 1,040 57 0 1,647 4,161 2,981

1,097 0 0 0 0 0 1,097 0

20,836 3,980 2,691 291 – 121 6,259 14,577 9,321

1,199 708 187 0 0 895 304 276

191 0 0 0 0 0 191 208

16,539 0 0 0 0 0 16,539 3,217

17,929 708 187 0 0 895 17,034 3,701

38,765 4,688 2,878 291 – 121 7,154 31,611 13,022

P A G E0 7 4

> S I N G U L U S T E C H N O L O G I E S A GN OT E S TO T H E C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S A S O F D E C E M B E R 31, 2 0 02

> N OT E 1 – B A S I S O F P R E S E N TAT I O N

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.Prior to the year ended December 31, 2001, the Company reported in DeutscheMarks (DEM). In fiscal year 2001, the Company adopted the Euro as its reportingcurrency and accordingly has prepared this year’s financial statements in Euro. The consolidated financial statements for prior years have been prepared usingDeutsche Marks as the reporting currency and have been restated in Euro for eachperiod presented using the official fixed conversion rate (EURO 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 inaccordance with accounting principles generally accepted in the United States(“U.S. GAAP”). Following the regulations of the New Market (Neuer Markt) thefinancial statements have to be prepared in accordance with International Finan-cial Reporting Standards (IFRS; formerly known as International AccountingStandards, IAS) or U.S. GAAP. The consolidated financial statements have beenprepared in accordance with the EC 7th Directive based on the interpretation ofthe Directive by GAS 1 “Exempting consolidated financial statements in accord-ance with § 292a of the German Commercial Code” issued by the German Ac-counting Standards Committee (GASC). According to the German Commercial Code(“HGB”), the Company, since it is listed on a German Stock Exchange, is exemptfrom publishing consolidated financial statements according to German generallyaccepted accounting principles (“German GAAP”). German GAAP varies in certainrespects from U.S. GAAP. Since the Company maintains its books and records inGerman GAAP, certain adjustments have been recorded for the preparation ofthese consolidated financial statements in accordance with U.S. GAAP. These ad-justments primarily relate to deferred taxes due to deductible temporary differen-ces and differences from consolidation, accounting for leases, accounting forpension obligations, accounting for stock-based compensation as well as account-ing for business combinations and goodwill.

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 7 5

> N OT E 2 – D E S C R I P T I O N O F B U S I N E S S

The Company is engaged in the development, manufacturing and distribution of metallizers for prerecorded, recordable and rewriteable CD and DVD coating and replication lines for the mentioned products. Metallizers are distributed under the name “SINGULUS” and “MODULUS” and replication lines under the names“SKYLINE” for prerecorded CD and DVD, “STREAMLINE” for CD-R and DVD-R,“SPACELINE” for Video DVD and “SUNLINE” for CD-RW and DVD-RW. Since 2002the Company is also engaged in the development, manufacturing and distributionof Mastering systems which complement the Company’s replication lines.

> N OT E 3 – S U M M A R Y O F S I G N I F I C A N T A C C O U N T I N G P O L I C I E S

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 OMP B.V., Best, Netherlands● OMP International GmbH, Schaffhausen, Switzerland● 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%.

P A G E0 7 6

The equity and net income attributable to minority shareholders’ interests areshown separately on the balance sheet and income statement, respectively. How-ever, if the minority shareholders’ share of losses exceeds the carrying amount oftheir interests in equity, this carrying amount is adjusted to zero and the recogni-tion of losses is discontinued. Therefore, no equity or net income attributable to minority shareholders’ in respect to SINGULUS Vika China Limited has beenrecognized as of December 31, 2002 and 2001. The total of unrecognized shares of losses attributable to minority shareholders’ amounts to KEUR –18 as December 31,2002, and TEUR – 20 as of December 31, 2001.

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

Acquisitions

Effective October 1, 2001, the Company acquired a 100 % equity interest in e-mould GmbH, Würselen, Germany, for KEUR 9,900. The Company accounted forthis business combinations in accordance with SFAS 141, “Business Combinations”.The resulting goodwill of KEUR 3,217 is not amortized but is subject to an annualimpairment test in accordance with SFAS 142, “Goodwill and Other IntangibleAssets”.

Effective January 1, 2002, the Company acquired a 100 % equity interest inOptical Measuring-Equipment & Projects B.V., Best, Netherlands, for KEUR 25,238.KEUR 11,343 of the purchase price were paid by issuing 379,110 ordinary bearershares with a fair market value as of December 6, 2002 of EUR 29.92 per share.The Company accounted for this business combination in accordance with SFAS141, “Business Combinations”. KEUR 1,400 of the purchase price were allocated toland and buildings and KEUR 1,600 were allocated to other intangible assets(production backlog). The resulting Goodwill of KEUR 13,322 is not amortized butis subject to an annual impairment test in accordance with SFAS 142, “Goodwilland Other Intangible Assets”.

Under SFAS 142, goodwill will no longer be amortized on a straight-line basisover its estimated useful life, but will be tested for impairment at least annually.The goodwill impairment test, which is based on fair value, is to be performed on areporting unit level. A reporting unit is defined as a SFAS 131 operating segment or one level lower. Under SFAS 142, intangible assets with indefinite lives will notbe amortized. Instead, they will be carried at the lower of cost or market value and

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 7 7

tested for impairment at least annually. All other recognized intangible assets willcontinue to be amortized over their estimated useful lives.

Based on the initial adoption of SFAS 142 as of December 31, 2002, no goodwillimpairment exists.

Pro Forma Financial Information

The following pro forma financial information is presented to illustrate the esti-mated effect of the acquisitions of e-mould GmbH, Würselen, Germany (e-mould)and Optical Measuring-Equipment & Projects B.V., Best, Netherlands (OMP), as ifsuch transaction had occurred as of January 1, 2001.

The pro forma information above does not purport to be indicative of the resultsthat actually would have been achieved if the transactions had occurred on thedate assumed and is not intended to be a projection of future results or trends.

SINGULUS e-mould OMPHistorical Historical Historical Pro Forma

KEUR KEUR KEUR KEUR

Net revenues 225,525 6,452 16,376 248,353

Net income 27,935 – 1,495 5,133 31,573

Basic net incomeper share (Euro) 0.77 0.85

Diluted net incomeper share (Euro) 0.74 0.81

Pro Forma Financial Information annual year 2001

P A G E0 7 8

> F O R E I G N C U R R E N C Y T R A N S L AT I O N

The financial statements of the Company’s foreign subsidiaries are measured in the currency in which that entity primarily conducts its business (the functionalcurrency). The functional currency of all these subsidiaries is the applicable localcurrency. The translation of the applicable foreign currency into Euro is performedfor balance sheet accounts using current exchange rates in effect at the balancesheet date, except for subsidiaries’ share capital which is translated at the relevanthistorical rate, and for revenue and expense accounts using the weighted-averagerates of exchange prevailing during the year. The unrealized gains and losses result-ing from such translation are included in accumulated other comprehensive income.

Gains and losses from foreign currency transactions are charged or credited tocurrent income.

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 dateof the financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results could differ from these estimates.

Revenue recognition

Revenue is recognized when persuasive evidence of an arrangement exists,products have been shipped (for metallizers – excluding MODULUS –, mouldingmachines and mastering systems), acceptance by customers has been obtained (for replication lines) or services have been rendered, the price of the transaction is fixed and determinable and 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 prin-ciples to revenue recognition in financial statements. Specifically, the bulletinprovides both general and specific guidance as to the periods in which companiesshould recognize revenues.

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 7 9

In addition, SAB 101 also highlights factors to be considered when determiningwhether to recognize revenues on a gross or net basis. The Company believes thatits policies with regard to the recognition of revenues are in compliance with theguidance of SAB 101.

Research and development

Significant costs are incurred each year in connection with research anddevelopment and engineering programs that are expected to contribute profits to future operations. Such costs are charged to income as incurred.

Cash and cash equivalents

The Company considers all highly liquid investments purchased with an originalmaturity of three months or less and bank drafts with an original maturity ofthree month or less to be cash equivalents.

Accounts receivable

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

Inventories

Inventories are generally valued at the lower of cost or market. Raw materialsand supplies including spare parts are valued at average cost. A full cost absorptionmethod is employed using standard cost techniques for the costing of work-inprocess. The standards are reviewed and adjusted annually. Potential losses fromobsolete and slow-moving inventories are provided for in the current period.

Property, plant and equipment

Property, plant and equipment are recorded at acquisition cost. For financialreporting purposes depreciation is provided on a straight-line basis over theestimated useful 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

P A G E0 8 0

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

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

The Company applies the provisions of SFAS No. 144, “Accounting for the Im-pairment of Long-Lived Assets and for Long-Lived Assets to be disposed of”. Thisstatement requires that long-lived assets and certain identifiable intangibles bereviewed for impairment whenever events or changes in circumstances indicatethat the carrying amount of an asset may not be recoverable. Recoverability ofassets to be held and used is measured by a comparison of the carrying amount ofan asset to future net cash flows expected to be generated by the assets. If suchassets are considered to be impaired, the impairment to be recognized is measuredby the amount by which the carrying amount of the assets exceed the fair valueof the assets. Assets to be disposed of are reported at the lower of the carryingamount or fair value less costs to sell.

In 2002 and 2001, no events or changes in circumstances occurred which indi-cated that the carrying amount of any asset may not be recoverable.

Intangible assets

Acquired intangible assets are stated at acquisition cost, less amortization on a straight-line basis over their estimated useful life (3 years for EDP software). In addition, intangible pension assets as calculated and recorded under SFAS 87,“Employers” accounting for pensions’, are included in intangible assets. KEUR 16,539 of the intangible assets relate to goodwill resulting from the acqui-sition of e-mould GmbH, Würselen, Germany, in 2001 and Optical Measuring-Equipment & Projects B.V., Best, Netherlands, in 2002. Please refer to “Acquisitions”.

Warranty accruals

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

Pension accruals and other accruals

The valuation of pension accruals is based upon the projected unit credit methodin accordance with SFAS 87, “Employers’ Accounting for Pensions”. Other accrualsare recorded when an obligation to a third party has been incurred, the payment isprobable and the amount can be reasonably estimated.

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 8 1

Leases

The Company is a lessee of property, plant and equipment and a lessor of equip-ment (replication lines). All leases that meet certain specified criteria intended to represent situations where the substantive risks and rewards of ownership havebeen transferred to the lessee are accounted for as capital leases. All other leasesare accounted for as operating leases.

Equipment under operating leases, where the Company is the lessor, is valued at production costs and depreciated over its estimated useful live of 5 years usingthe straight-line method. Related lease income is recorded when earned on astraight-line basis.

Deferred taxes

Deferred taxes are accounted for under the asset and liability method. Deferredtax assets and liabilities are recognized for the future tax consequences attribut-able to differences between the financial statement carrying amounts of existingassets and liabilities and their respective tax bases and for operating losses andcarry forwards. Deferred tax assets and liabilities are measured using enacted taxrates expected to apply to taxable income in the years in which those temporarydifferences are expected to be recovered or settled. The effect on deferred taxassets and liabilities of a change in tax rates is recognized in income in the periodthat includes the enactment date.

Stock based compensation

The Company has issued convertible bonds to management and certain otheremployees which are accounted for in accordance with Accounting PrinciplesBoard (APB) Opinion No 25, “Accounting for Stock Issued to Employees”. Followingthe provisions of SFAS 123, “Accounting for Stock based Compensation”, therequired additional disclosures are given in the notes to the consolidated financialstatements.

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.

P A G E0 8 2

Comprehensive income of the Company consists of net income, currency trans-lation adjustment and minimum pension liability adjustment, as presented on the face of the consolidated income statement. SFAS 130 requires only additionaldisclosures in the consolidated financial statements; it does not affect the Com-pany's financial position or results of operations.

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 arecomputed by dividing net income applicable to common shareholders by theweighted average number of common and common equivalent shares outstanding.

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 itssubsidiaries are end-users and do not utilize these instruments for speculativepurposes. The Company has strict policies regarding financial stability and thecredit worthiness of its counter parties.

In June 1998, the Financial Accounting Standards Board issued Statement of Finan-cial Accounting Standards (SFAS) 133, “Accounting for Derivative Instruments andHedging Activities”. SFAS 133 establishes accounting and reporting standards requiringthat every derivative instrument (including certain derivative instruments embeddedin other contracts) be recorded on the balance sheet as either an asset or liabilitymeasured at its fair value. The statement requires that changes in the derivative’s fairvalue be recognized currently in earnings unless specific accounting criteria are met.

If a derivative instrument qualifies for hedge accounting, the gains or lossesfrom the derivative may offset results from the hedged item in the statement of operations or other comprehensive income, depending on the type of hedge. To qualify for hedge accounting, a company must formally document, designateand assess the effectiveness of transactions that are to receive hedge accounting.

In June 2000, the Financial Accounting Standards Board issued SFAS 138,“Accounting for Certain Derivative Instruments and Certain Hedging Activities”.This Statement addresses a limited number of issues causing implementationdifficulties for numerous entities that apply SFAS 133 and this Statement amendsthe accounting and reporting standards of SFAS 133 for certain derivative instru-ments and certain hedging activities.

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 8 3

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 any fiscal quarter after issuance; however, SFAS 133 cannot be applied retro-actively.

Effective January 1, 2001, the Company adopted SFAS 133 as amended by SFAS137 and SFAS 138. The adoption did not have a material impact on the financialposition or the results of operations of the Company.

As of December 31, 2002, the Company had foreign currency forward contractsamounting to USD 13.0 million (December 31, 2001: USD 3.6 million) in order tohedge foreign currency risks relating to trade accounts receivable. Those derivativetransactions, while providing effective economic hedges under the Company's riskmanagement policies, do not qualify for hedge accounting under the rules of SFAS 133. Changes in the fair value of any derivative instruments that do notqualify for hedge accounting under SFAS 133, are recognized in other operatingincome or expenses. Therefore, a gain of KEUR 1,414 (prior year: loss of KEUR 91) in respect to those contracts has been recorded.

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 allqualified clients and does not believe that it is exposed to undue concentration ofcredit risk to any significant degree.

New pronouncements

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 retire-ment obligation be recognized in the period in which it is incurred if a reasonableestimate of fair value can be made. The associated asset retirement costs are capi-talized as part of the carrying amount of the long-lived asset. An entity shallmeasure changes in the liability for an asset retirement obligation due to passageof time by applying an interest method of allocation to the amount of the liabilityat the beginning of the period. The interest rate used to measure that change shallbe the credit-adjusted risk-free rate that existed when the liability was initiallymeasured. That amount shall be recognized as an increase in the carrying amountof the liability and as an expense classified as an operating item in the statementof income. SFAS 143 is effective for fiscal years beginning after June 15, 2002.

P A G E0 8 4

The Company does not anticipate that adoption of SFAS 143 will have a materialimpact on its results of operations or its financial position.

In April 2002 the FASB issued SFAS No. 145. This statement amends SFAS No. 13which requires that certain lease modifications that have economic effects similarto sale-leaseback transactions be accounted for in the same manner as sale-lease-back transactions. This especially effects contracts that have previously been ac-counted for as a capital lease, and now have to be classified as an operating lease.

SFAS No. 145 is effective for financial years beginning after May 15, 2002 withearly application encouraged. The Company is of the opinion that the adoption of SFAS No. 145 will not have a material impact on its result of operation or itsfinancial position.

In June 2002, the FASB issued SFAS 146, “Accounting for the Costs Associatedwith Exit or Disposal Activities”. SFAS 146 addresses significant issues regarding therecognition, measurement and reporting of costs that are associated with exit anddisposal activities, including restructuring activities that are currently accountedfor under Emerging Issues Task Force (“EITF”) 94-3, “Liability Recognition for CertainEmployee Termination Benefits and Other Costs to Exit an Activity (includingCertain Costs Incurred in a Restructuring)”.

SFAS 146 also includes costs related to terminating a contract that is not a capi-tal lease and termination benefits that employees who are involuntary terminatedreceive under the terms of a one-time benefit arrangement that is not an ongoingbenefit or an individual deferred-compensation contract. SFAS 146 will be effec-tive for exit or disposal activities that are initiated after December 31, 2002.

The adoption of SFAS 146 is not expected to have a material impact on theCompany’s financial statements.

In November 2002, the FASB issued FASB Interpretation (“FIN”) 45, “Guarantor’sAccounting and Disclosure Requirements for Guarantees, Including IndirectGuarantees of Indebtedness of Others – an interpretation of FASB statements 5, 57 and 107 and rescission of FASB Interpretation 34.” This interpretation elabora-tes on the disclosure to be made by a guarantor in its financial statements regard-ing obligations under certain guarantees that it has issued. FIN 45 also clarifiesthat a guarantor is required to recognize, at inception of a guarantee, a liabilityfor the fair value of the obligation due to the issuance of the guarantee. Disclosurerequirements are effective for financial statements of interim and annual periodsending after December 15, 2002. The recognition and measurement provisions are

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 8 5

effective for guarantees issued or modified after December 15, 2002. The Companyis currently determining the impact of the recognition and measurement provi-sions of FIN 45 on its consolidated financial statements.

In December 2002, the Financial Accounting Standards Board issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure”.SFAS No. 148 amends SFAS No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition to the fair value method of accountingfor stock-based employee compensation. In addition, SFAS No. 148 amends thedisclosure provisions of SFAS No. 123 to require disclosure in the summary ofsignificant accounting policies of the effects of an entity’s accounting policy withrespect to stock-based employee compensation on reported net income andearnings per share in annual and interim financial statements. SFAS No. 148 doesnot amend SFAS No. 123 to require companies to account for their employeestock-based awards using the fair value method. However, the disclosure provi-sions are required for all companies with stock-based employee compensation,regardless of whether they utilize the fair method of accounting described in SFASNo. 123 or the intrinsic value method described in APB Opinion No. 25, Accountingfor Stock Issued to Employees. The provisions of SFAS No. 148 are effective forfiscal years beginning after December 15, 2002. The Company does not expectSFAS No. 148 to have any effect on its financial position or results of operationsupon its adoption in fiscal year 2003.

Corporate governance

Pursuant to the German Stock Corporation Law (“AktG”), §161 and §15 EGAktG,the Company’s Board of Directors and Supervisory Board have issued a declarationof compliance and have granted shareholders permanent access to this declaration.

> N OT E 4 – C A S H A N D C A S H E Q U I VA L E N T S

2002 2001KEUR KEUR

Cash at bank and cash in hand 33,174 47,431

Bank drafts with original maturity of three months or less 20,741 0

53,915 47,431

Cash and cash equivalents consist of the following:

P A G E0 8 6

> N OT E 5 – A C C O U N T S R E C E I VA B L E A N D OT H E R A S S E T S

The increase in tax refunds is mainly due to overpayments to tax authorities in2002.

Concerning “Forward contracts at fair value” please refer to ”Derivative FinancialInstruments” under Note 3.

2002 2001KEUR KEUR

Trade accounts receivable – short term 61,300 61,840

Trade accounts receivable – long term 18,248 4,011

Less – allowance for doubtful accounts (8,305) (4,637)

71,243 61,214

Trade accounts receivable

2002 2001KEUR KEUR

Tax refunds 8,341 3,054

Forward contracts at fair value 1,414 0

Prepaid expenses 532 12

Employee loans 221 0

Insurance claims 124 0

Accrued interest income 17 100

Others 1,520 1,098

12,169 4,264

Other receivables and other assets

> N OT E 6 – I N V E N TO R I E S

> N OT E 7 – L I A B I L I T I E S

The remaining purchase price for acquisitions relates to the acquisition ofOptical Measuring-Equipment & Projects B.V., Best, Netherlands.

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 8 7

2002 2001KEUR KEUR

Raw materials and packing materials 31,663 25,688

Work-in process 62,954 37,449

Prepayments to suppliers 1,672 1,067

Less – inventory reserve (7,440) (7,503)

88,849 56,701

Inventories consist of the following:

2002 2001KEUR KEUR

Accruals for invoices not yet received 3,455 2,636

Remaining purchase price for acquisitions 2,701 0

Sales commissions 2,550 1,971

Annual bonus 1,408 479

Liabilities for employee’s compensationfor future absence 1,244 1,081

Liabilities for social security insurance 925 766

Outstanding wages and salaries 922 0

Other personnel liabilities 787 317

Outstanding credit notes to customers 710 876

Current portion of convertible bonds 511 186

Tax liabilities 439 239

Year-end closing liabilities 414 386

Shareholder’s meeting/Annual report liabilities 385 445

Other 1,916 575

18,367 9,957

Other current liabilities

P A G E0 8 8

Progress payments

The progress payments at December 31, 2002 and 2001, represent the advancepayments received from customers mainly for replication lines included in thework-in process.

The increase is mainly due to the fact that orders for replication lines are higherthan prior year’s volume.

Long-term loans

Long-term loans include only convertible bonds held by management andcertain other employees.

The convertible bonds have been issued according to a management shareoption plan. This was created for members of the management board and otherkey employees of the Company in order to motivate the respective subscribers to ensure the success of the Company. The conditional capital increase necessaryfor the issuance of the convertible bonds was agreed upon by the extraordinarygeneral shareholders’ meeting on November 6, 1997, the ordinary shareholders’meeting on May 7, 1999 and the ordinary shareholders’ meeting on May 7, 2001.According to the shareholders’ resolutions, the management board is authorized to issue interest-bearing convertible bonds in one or more steps with an aggregatenominal value of up to Euro 1,597,104 up to September 30, 2002 and to issueinterest-bearing convertible bonds in one or more steps with an aggregate nominalvalue of up to Euro 1,800,000 up to September 30, 2005 and a maturity up toDecember 31, 2010, subject to the consent of the supervisory board.

2002 2001KEUR KEUR

Advanced payments received from customers 11,984 8,427

Progress payments

2002 2001KEUR KEUR

Long-term portion of convertible bonds 1,147 1,179

Long-term loans

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 8 9

On November 30, 1997, 150,000 convertible bonds with a nominal amountaggregating to KEUR 383 with an interest rate of 6 % p. a. were issued. Each DM 5(Euro 2.56) nominal value of convertible bonds may be converted to six ordinarybearer share with a nominal value of Euro 1. The conversion rate was fixed to theinitial offer price of DM 82 (Euro 41.93) per share with a nominal value of 5 DM.Considering a 3 for 1 stock split and another 2 for 1 stock split after the issuanceof the convertible bonds the current conversion rate is Euro 6.99. In 1998 and1999, 14,727 convertible bonds equivalent to KEUR 38 were returned by employeeswho have left the company. In 1999, 2000 and 2001, 72,742 of the convertiblebonds with a total nominal value of KEUR 186 were converted. Another 21,946convertible bonds with a total nominal value of KEUR 56 were converted in 2002.A further 7.5 % may be converted on each conversion date thereafter. Conversiondates are May 31 and November 30 of each calendar year up to 2005. On Decem-ber 31, 2002, the aggregated nominal value of the outstanding convertible bondsof this tranche amounts to KEUR 104.

494,181 convertible bonds with an aggregated nominal value of KEUR 494 wereissued in 2000 with an interest rate of 6 % p. a. Each Euro 1 nominal value ofconvertible bonds may be converted to two ordinary bearer share with a nominalvalue of Euro 1. 121,000 convertible bonds equivalent to KEUR 121 have beenreturned in 2000 by employees who have left the Company. In 2000 and 2001these convertible bonds were given to new employees. The conversion rate forconvertible bonds with an aggregate nominal value of KEUR 373 was fixed to theshare price as of December 21, 1999 (Euro 29.73 per share, considering a 2 for 1stock split after the issuance of the convertible bonds) with a nominal value of 1Euro. The conversion rate for convertible bonds with an aggregate nominal valueof KEUR 81 was fixed to the share price as of November 30, 2000 (Euro 37.50 pershare). The conversion rate for the remaining convertible bonds with an aggregatenominal value of KEUR 40 was fixed to the share price as of January 31, 2000(Euro 42.45 per share, considering a 2 for 1 stock split after the issuance of theconvertible bonds). 25 % of the convertible bonds may be converted on May 31,2002 and a further 7.5 % may be converted on each conversion date thereafter.Conversion dates are May 31 and November 30 of each calendar year up to 2007.In fiscal year 2002, 153,181 convertible bonds with an aggregate amount of KEUR 153 were returned to the Company. On December 31, 2002, the aggregatednominal value of the outstanding convertible bonds of this tranche amounts to KEUR 341.

In 2001, 711,000 convertible bonds with an aggregated nominal value of KEUR 711 were issued at nominal value with an interest rate of 4 % p. a. Each Euro 1nominal value of convertible bonds may be converted to one ordinary bearer

P A G E0 9 0

share with a nominal value of Euro 1. The conversion rate for these convertiblebonds was fixed to Euro 32.53 equaling 130 percent of the average share price of the period from May 14 to May 18, 2001 (Euro 25.02 per share). 25 % of theconvertible bonds may be converted at May 31, 2003 and a further 15 % may beconverted on each conversion date thereafter. Conversion dates are May 31 andNovember 30 of each calendar year up to 2006. In 2002, 61,432 convertible bonds with an aggregate amount of KEUR 61 were returned to the Company. OnDecember 31, 2002, the aggregated nominal value of the outstanding convertiblebonds of this tranche amounts to KEUR 650.

In 2002, 563,182 convertible bonds with an aggregated nominal value of KEUR 563 were issued at nominal value with an interest rate of 4 % p. a. Each Euro1 nominal value of convertible bonds may be converted to one ordinary bearershare with a nominal value of Euro 1. The conversion rate for these convertiblebonds was fixed to Euro 19.09 equaling 130 percent of the average share price of the period from September 9 to September 13, 2002 (Euro 14.69 per share).25 % of the convertible bonds may be converted at November 30, 2004 and afurther 15% may be converted on each conversion date thereafter. Conversion dates are May 31 and November 30 of each calendar year up to 2007. On Decem-ber 31, 2002 the aggregated nominal value of the outstanding convertible bonds of this tranche amounts to KEUR 563.

As of December 31, 2002, the aggregate nominal value of all four tranches ofthe convertible bonds amounts to KEUR 1,658. Based on the conversion date, the value at 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 511 and therefore is stated under “Other currentliabilities”.

KEUR

Due in 2003 511

Due in 2004 427

Due in 2005 403

Due in 2006 208

Due in 2007 1091,658

Value at maturity of the bonds

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 9 1

Compensation expenses are calculated and recorded for stock option plans thatqualify as variable plans under APB No. 25. In fiscal year 2002, the Company didnot record compensation expenses in relation to the stock option plans since theperformance conditions as defined were not met as of December 31, 2002.

Had compensation expense for options granted under the plans been deter-mined based on fair value at the grant dates in accordance with SFAS 123, thecompany’s charge to income for the year 2002 and 2001 would have been KEUR 4,117 and KEUR 4,198 respectively. Net income and earnings per share wouldhave been reduced to the pro-forma amounts shown below:

The fair value of options granted was estimated using the Black-Scholes stock options pricing model. The following assumptions were used for the calcula-tion of the options granted in 2002: dividend yield of zero, volatility of 63.4 %(2001: 64.0 %), risk free rate of 3.8 % (2001: 4.4 %) and expected life of 4.5 years(2001: 4.0 years).

All options granted in the year 2002 had an exercise price of EUR 19.09 which was above the market value of the stock, and the fair value of each option was EUR 5.54.

2002 2001

As reported (KEUR) 36,589 27,935

Pro Forma (KEUR) 32,472 23,737

Net income under US GAAP:

2002 2001

As reported (EUR) 0.99 0.77

Pro Forma (EUR) 0.88 0.65

Earnings per share per US GAAP (basic):

P A G E0 9 2

The following table summarizes the information about the stock options out-standing at December 31, 2002.

> N OT E 8 – E M P L O Y E E B E N E F I T P L A N S

In Germany, the Company sponsors a pension plan covering all employees whowere taken over from Leybold AG, the employees who were hired by Leybold AGon behalf of the Company as well as the members of the board of directors. The pension plan is based on the benefit plan of Leybold AG established in 1969and the amendments hereto as of 1977, 1986 and 2001.

Consistent with German practice, the pension plan is not funded. Pension costsare recorded based on independent actuarial valuations. Pension benefits underGerman plans are generally based on a percentage of the employees’ compen-sation for each year of credited service.

Range of Number of Weighted Weightedexercise prices stock options average exercise average remaining

price contractual life

EUR EUR Years

6.99 40,585 6.99 2.0

19.09 563,182 19.09 4.5

29.73 220,000 29.73 4.5

32.53 649,568 32.53 3.0

37.50 81,000 37.50 4.5

42.45 40,000 42.45 4.5

1,594,335 27.25 3.8

Stock options outstanding at December 31, 2002:

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 9 3

2002 2001KEUR KEUR

Projected benefit obligation, beginning balance 2,723 1,638

Service cost 155 102

Interest cost 163 102

Amendments 0 313

Actuarial (gain)/loss 239 567

Benefits paid (20) 0

Projected benefit obligation, ending balance 3,260 2,722

Funded status (3,260) (2,722)

Unrecognized net (gain) or loss 720 493

Unrecognized prior service cost 191 254

Net amount recognized (2,349) (1,975)

Change in projected benefit obligation:

2002 2001KEUR KEUR

Accrued pension liability (2,763) (2,183)

Intangible assets 191 208

Accumulated other comprehensive income 223 0

(2,349) (1,975)

Amounts recognized in the consolidated balance sheet consist of:

The table that follows contains a reconciliation of the changes in the benefitobligation and the funded status for the respective reporting periods:

P A G E0 9 4

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

> N OT E 9 – OT H E R A C C R U A L S

Warranty accruals are determined based on the estimated costs of fulfilling the warranty obligation, including handling and transportation costs and calculatedas a percentage of sales (2 % for all sales and 6 % for prototypes) based onexperience.

Buy-back guarantees were given to leasing institutions and relate to sales ofreplication lines. The Company sets up provisions for buy-back-obligations, if thereis evidence that one or more replication lines will be returned.

2002 2001

Discount rate 5.75 % 6.00 %

Salary increase 3.00 % 3.30 %

Pension payment increase 1.50 % 2.00 %

Principal weighted assumptions

2002 2001KEUR KEUR

Service cost 155 102

Interest cost 163 102

Amortization of prior service cost 63 60

Recognized actuarial loss/(gain) 13 0

394 264

The components of net periodic pension cost were as follows:

2002 2001KEUR KEUR

Warranty accruals 8,671 5,240

Buy-back obligations 1,432 2,190

Contingent losses 1,000 2,600

Other 542 701

11,645 10,731

Other accruals include the following:

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 9 5

> N OT E 10 – S H A R E H O L D E R S ’ E Q U I T Y

Share capital

In 2001, the share capital increased by KEUR 115 due to the conversion ofconvertible bonds when 115,128 new bearer shares were issued.

In 2002, the share capital increased by KEUR 132 due to the conversion ofconvertible bonds when 131,676 new bearer shares were issued. Moreover 379,110new bearer shares with a total nominal amount of KEUR 379 were issued in orderto pay 50 percent of the provisional purchase price for the acquisition of OpticalMeasuring-Equipment & Projects B.V., Best, Netherlands. At December 31, 2002,the share capital of the Company amounts to KEUR 36,947 and consists of36,947,226 bearer shares, with a nominal value of EURO 1 each. All shares havebeen fully paid. Each share is entitled to one vote. All shares are admitted to theofficial market [Geregelter Markt] with trading on the New Market [Neuer Markt],a market segment of the Frankfurter Stock Exchange [Deutsche Börse Frankfurt].

Conditional capital

The management board is authorized to issue, in one or more steps, interest-bearing convertible bonds equivalent to KEUR 1,800 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 followinga share management option plan. In 2000, a nominal amount, aggregating toKEUR 494 of the conditional capital, was converted to convertible bonds accordingto an additional share management option plan. In 2001 a nominal amount ag-gregating to KEUR 711 of the conditional capital was converted to convertiblebonds and in 2002 a further nominal amount, aggregating to KEUR 563 was con-verted to convertible bonds. The long-term portion of the convertible bonds arestated under “Long-term liabilities”, the current portion due within one year isstated under “Other current liabilities”. We further refer to the comments underNote 7 – Liabilities.

Authorized capital

The management board is authorized to increase the Company’s share capitalwith the consent of the supervisory board, in one or more steps, until June 21,2007, by an aggregate nominal amount of up to KEUR 7,363 by issuing new bearershares with a nominal value of Euro 1 each, against contribution in cash or in

P A G E0 9 6

kind (authorized capital 1). Furthermore, the management board is authorized toincrease the Company’s share capital, in one or more steps, until June 21, 2007 by an aggregate nominal amount of up to KEUR 1,841 by issuing new bearer shareswith a nominal value of EURO 1 each, against contribution in cash or in kind(authorized capital 2). For both authorized capital amounts the pre-emptive rightsmay, with consent of the supervisory board, be excluded under certain conditions.

Additional paid-in capital

The additional paid-in capital increased in 2002 by KEUR 789 and in prior yearsby KEUR 2,714 due to the conversion of convertible bonds. Moreover the additionalpaid-in capital increased in 2002 by KEUR 10,964 when 379,110 new bearer shareswith a total nominal amount of KEUR 379 were issued in order to pay 50 percentof the provisional purchase price for the acquisition of Optical Measuring-Equip-ment & Projects B.V., Best, Netherlands.

Dividend payments

Dividends may only be declared and paid from distributable shareholders equityas shown in the Company’s annual statutory unconsolidated accounts. As ofDecember 31, 2002, the Company’s German statutory unconsolidated accountsstate revenue reserves of KEUR 12,441 and retained earnings of KEUR 78,760.

> N OT E 11 – L E A S E S A N D R E N TA L S

As of December 31, 2002, minimum annual rental payments for rental commit-ments were as follows:

KEUR

2003 1,103

2004 1,103

2005 1,103

2006 1,103

2007 1,103

2008 and thereafter 11,581

17,096

Minimum annual rental payments for rental commitments

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 9 7

Rental expenses for these operating leases were KEUR 1,103 for 2002 and KEUR 1,103 for 2001.

> N OT E 12 – I N T E R E S T I N C O M E / - E X P E N S E S

> N OT E 13 – I N C O M E TA X E S

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 the German tax authorities, the usage of tax loss carry forwards may be limited.This paper presents the interpretation of the tax authorities but does not representlaw and may eventually be either confirmed or abolished by the Federal Tax Court.In this opinion, the tax authorities state that tax loss carry forwards acquired inconnection with a change in ownership of a corporation of more than 50 % of the shares cannot be used against future income if predominantly new assets aresupplied in the following five years. Based on this paper, the usage of such taxlosses could be disallowed 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 to 4.6 million Euro exists. However, legal proceedings are pending before thefederal court (Bundesverfassungsgericht) with regard to the formal unconstitutio-nality of Sec. 12 (2) UmwStG (Reorganization Tax Law) due to failure to complywith the legislative procedure. As the legislative procedure for Sec. 8 (4) KStG(Corporate Income Tax Act) has the same defects, it is possible that this regulationis formally unconstitutional as well. At present, the outcome of this discussion is uncertain and cannot be finally evaluated. Accordingly, no accrual has been setup for this matter in the financial statements.

2002 2001KEUR KEUR

Interest income from financial investments 303 821

Other interest income 1,817 1,999

Interest expenses (340) (599)

1,780 2,221

Interest income consists of the following

P A G E0 9 8

Beside this contingency, the tax accruals (2002: KEUR 10,291; 2001: KEUR 5,284)include a provision for income taxes which has been set up in prior years in anamount of KEUR 5,113, as the acceptance of the realization of corporate incometax loss carry forwards in prior years by the tax authorities is subject to a finalassessment.

Income tax data from continuing operations for the year ended December 31,2002 and 2001, is as follows:

Under German corporate tax law, taxes on income are composed of corporatetaxes, trade taxes and solidarity surcharge. Deferred income taxes are establishedfor all significant temporary differences between the amount of assets and liabi-lities recognized for financial reporting purposes and for tax purposes.

2002 2001Pretax income: KEUR KEUR

Germany 39,044 45,305

Foreign 22,194 10,374

61,238 55,679

Consolidation adjustments (6,717) (13,231)

54,521 42,448

Current income tax:

Germany:

Corporate income tax 7,307 7,321

Trade tax 4,209 4,108

Foreign:

Income tax 6,633 3,585

18,149 15,014

Deferred income tax:

Germany 139 (276)

Foreign (356) (225)

Total income tax 17,932 14,513

Income tax data from continuing operations

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E0 9 9

Deferred tax liabilities of KEUR 503 (in 2001: KEUR 122) which relate to con-solidation adjustments (KEUR 308 in 2002 and KEUR 0 in 2001) and othertemporary differences (KEUR 195 in 2002 and KEUR 122 in 2001) are included in the tax accruals.

The German statutory tax rate (for income tax, trade tax on income and solidar-ity surcharge) was approximately 36.0 % for the year ended December 31, 2002,and 36.0 % for the year ended December 31, 2001. The reconciliation between thestatutory tax rates for income taxes and the effective tax rate is as follows:

2002 2001KEUR KEUR

Temporary differences due to

Inventory reserves 2,160 918

Other accruals/liabilities 809 1,613

Warranty accruals 763 726

Allowance for doubtful accounts 319 252

Other temporary differences 666 846

Consolidation adjustments 845 675

5,562 5,030

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

2002 2001

Statutory tax rate 36.0 % 36.0 %

Differences in foreign tax rates –1.9 % –1.4 %

Non tax deductible items (Germany) 0.0 % 0.2 %

Non tax deductible consolidation adjustments 0.4 % – 0.6 %

Prior years tax refunds –1.6 % 0.0 %

Effective tax rate 32.9 % 34.2 %

The reconciliation between the statutory tax rates for income taxes and the effective tax rate

P A G E 1 0 0

> N OT E 14 – C O N T I N G E N T L I A B I L I T I E S

Contingent liabilities not recognized on the consolidated balance sheets amountto KEUR 50,575 and represent buy-back guarantees given to leasing institutionsrelated to sales of replication lines (KEUR 35,291) and contingent liabilities in con-nection with the discount of bank drafts (KEUR 15,284). If there are any claimsunder the guarantees given to leasing institutions, the Company has the right toresell the replication lines bought back.

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

> N OT E 15 – S E G M E N T R E P O R T I N G

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 as separate industry segments and do not require individual financialreporting for segments.

2002 2001KEUR KEUR

Prerecorded CDs/DVDs 220,967 169,300

Recordable CDs/DVDs 14,722 21,441

Mastering Systems 15,656 0

Service and other 39,203 34,784

290,548 225,525

Revenue by product group

| || | | | |CO

NSO

LIDA

TED REPO

RT 2002 NO

TES

P A G E 1 0 1

Germany Rest of America AsiaEurope

KEUR KEUR KEUR KEUR

Gross revenueby country of

Origin 256,202 19,691 10,334 4,321

Destination 17,186 90,523 97,386 85,453

Geographic information as of December 31, 2002:

Germany Rest of America AsiaEurope

KEUR KEUR KEUR KEUR

Gross revenueby 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:

P A G E1 0 2

| || | | | |A

NN

UA

L REPORT 2002 H

GB

P A G E 1 0 3

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 the legal entity SINGULUS TECHNOLOGIES AG in prepared conformity with Germanaccounting prinicples and translated into English.

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



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


P A G E 1 0 4

Dec. 31, 2002 Dec. 31, 2001EUR EUR

Fixed assetsIntangible assetsFranchises, industrial Trademarks and similar rights and values, as well as lincences thereto 524,810.96 722,321.16Property, plant and equipmentEstates, similiar rights and buildings on foreign estates 15,805,286.99 16,253,843.39Technical equipment, plant and machinery 369,348.74 415,873.66Other equipment, operational and office equipment 2,193,870.44 1,846,997.98Prepayments to suppliers 1,097,299.32 0.00

19,465,805.49 18,516,715.03Equipment under operating leases 4,160,866.00 2,981,000.00Financial assets

Shares in affiliated companies 28,814,503.18 3,229,123.71Loans to affiliated companies 1,075,401.10 9,967,187.09

29,889,904.28 13,196,310.80Total fixed assets 54,041,386.73 35,416,346.99Current assetsTotal inventories

Raw and packing materials 20,276,453.76 16,249,989.38Work-in-process and finished goods 51,690,615.18 29,124,638.85Prepayments to suppliers 1,282,141.05 1,066,910.08Progress payments received – 10,498,092.31 – 8,154,535.55

62,751,117.68 38,287,002.76Total accounts receivable

Trade accounts receivable 76,228,331.09 50,484,381.44Accounts due from affiliated companies 25,145.66 578,823.34Other assets 8,262,561.39 6,146,913.94

84,516,038.14 57,210,118.72Checks, cash on hand and in Federal Bank and in postal giro accounts, and cash in bank 21,415,114.67 43,400,093.14Total current assets 168,682,270.49 138,897,214.62Deferred charges and prepaid expenses 388,779.11 12,306.39Total assets 223,112,436.33 174,325,868.00

Balance Sheets as of December 31, 2002 and 2001Assets

| || | | | |A

NN

UA

L REPORT 2002 H

GB BA

LAN

CE SHEETS

P A G E 1 0 5

Dec. 31, 2002 Dec. 31, 2001EUR EUR

Shareholders’ equityShare capital 36,947,226.00 36,436,440.00Add. Paid-in capital 26,949,080.39 15,196,798.99Other earnings reserve 78,759,569.85 51,851,673.83Retained earnings – ending 12,441,183.89 14,466,714.70Total shareholders‘ equity 155,097,060.13 117,951,627.52ProvisionsPension accruals and reserves for similar obligations 2,762,747.00 2,182,601.00Tax accruals 5,134,450.52 5,126,450.52Other provisions 17,146,778.15 16,146,369.66Total provisions 25,043,975.67 23,455,421.18LiabilitiesLong-term loans 1,657,509.01 1,365,044.07Liabilities against Creditinstitutions 0.00 46,153.06Trade accounts payable 10,963,346.91 10,903,701.80Accounts due to affiliated companies 11,220,000.90 5,177,695.30Other liabilities 19,130,543.71 15,426,225.07

– thereof for taxes EUR 265,083.34 (prior year EUR 210,994.71)

– thereof for social security EUR 835,042.68 (prior year EUR 719,338.72)

Total liabilities 42,971,400.53 32,918,819.30Total liabilities and shareholders’ equity 223,112,436.33 174,325,868.00

Balance Sheets as of December 31, 2002 and 2001Liabilities

P A G E 1 0 6

Dec. 31, 2002 Dec. 31, 2001EUR EUR EUR

Gross revenues 265,261,781.65 214,630,163.17Increase (decrease) in finished goods and work-in-process 22,565,976.33 -18,834,902.18Other capitelized production assets 2,773,565.00 3,645,000.00Other operating income 4,547,645.60 4,514,205.16

295,148,968.58 203,954,466.15Cost of materials

Cost of raw materials, supplies and benefit costs –187,506,569.19 –112,035,543.71

Personnel expensesa) Wages and salaries –17,464,666.31 –13,495,831.77b) Social security, pension

and other benefit costs –3,965,974.22 – 2,511,561.36thereof for pensions plan EUR 603,534.23 (prior year EUR 474,518.73)

Depreciation on intangible assets and plant and equipment – 2,868,061.92 –2,430,470.62Other operating expenses – 50,397,836.75 – 44,256,286.06

–262,203,108.39 –174,729,693.52Income from affiliated companies 2,434,260.42 9,837,542.03thereof from affiliated companies EUR 2,434,260.42 (prior year EUR 9,837,542.03)Other interest and similar income 2,225,172.89 2,845,756.87thereof from affiliated companiesEUR 165,877.15 (prior year EUR 33,829.44)Write-off financial assets and marketable securities 0.00 -3,369.70Interest and similar expenses –1,155,131.58 –1,365,722.40

3,504,301.73 11,314,206.80Operating income 36,450,161.92 40,538,979.43

Statements of Income for the years ended December 31, 2002 and 2001

| || | | | |A

NN

UA

L REPORT 2002 H

GB STA

TEMEN

TS OF IN

COM

E

P A G E 1 0 7

Dec. 31, 2002 Dec. 31, 2001EUR EUR EUR

Operating income 36,450,161.92 40,538,979.43Taxes on income –11,516,268.60 –11,428,243.16Other taxes – 51,525.54 – 177,306.87

–11,567,794.14 –11,605,550.03Net income 24,882,367.78 28,933,429.40Retained earnings at beginning of the year 14,466,714.70 18,541,384.50Allocation to other earnings reserve – 26,907,898.59 – 33,008,099.20Retained earnings at end of the year 12,441,183.89 14,466,714.70

Statements of Shareholders’ Equity for the years ended December 31, 2002 and 2001

P A G E1 0 8

> AV E R A G E TOTA L E M P L O Y M E N T

In the fiscal year concluded, the annual average of permanent numbered 277.The annual average for the prior year was 243.

> C O R P O R AT E B O D I E S O F S I N G U L U S T E C H N O L O G I E S A G

The Supervisory Board consists of three members who are appointed at theGeneral Shareholders’ Meeting. Supervisory Board members for the period underreview are listed below:

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

Chairman Vice Chairman

The appointment of the aforementioned Supervisory Board memebers is in effectthrough the General Shareholders’ Meeting at which time a discharge decision forfiscal 2005 will be made.

> S U P E R V I S O R Y B O A R D R E M U N E R AT I O N

Each member of the Supervisory Board receives, in addition to compensation for expenses, fixed remuneration amounting to Euro 15,000 for each full financialyear of Supervisory Board membership. This fixed remuneration is payable at theend of the financial year. In addition, subsequent to the decision on profit appropri-ation, each Supervisory Board member receives, for its membership on the Super-visory Board during the preceding financial year, performance-based remunerationof Euro 800.00 for each cent by which the consolidated earnings per share, pur-suant to US-American accounting standards, exceed the amount of Euro 0.30. The basis of assessment is at most equal to the Company’s balance sheet profitreduced by an amount of four of a hundred of the capital invested in the lowestissue amount of the shares.

The Chairman of the Board receives twice this amount, the deputy Chairmanreceives one and a half times the amount of fixed and performance-basedremuneration.

Supervisory Board members who have been members of the Supervisory Boardfor only part of the financial year receive a reduced amount of fixed andperformance-based remuneration on a prorated basis.

| || | | | |A

NN

UA

L REPORT 2002 H

GB M

ISCELLAN

EOU

S

P A G E 1 0 9

The Company reimburses each Supervisory Board member for the turnover taxattributable to its remuneration.

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

Professions Further memberships inSupervisory Boards and otherbodies

Alexander von Engelhardt Supervisory Board ● WashTec AG (Chairman)● Dr. Schmidt AG & Co.

(Vice Chairman)● K. u. M. Möbel AG,

Kirchlengern (Vice Chairman)● Gütermann AG● Tarkett Sommer AG● Comline AG

William Slee Supervisory Board ● The Game Group plc, UK(non executive Director)

● Algemeen Burgerlijk Pensioenfonds, Netherlands (Member of the InvestmentCommittee)

● Charles Vögele Holding AG, Switzerland (Member of Supervisory Board)

● ECOFIN Water + Power Opportunities plc., UK

Thomas Geitner Executive Director ● Vodafone D2 GmbH,Dusseldorf● Arcor AG & Co., Eschborn

Chairman● Vodafone Libertel N.V.,

Netherlands● Vodafone Omnitel N.V., Italy● Vodafone Information

Systems GmbH, Dusseldorf (Chairman)

P A G E1 1 0

Members of the company’s management board were in 2002 Roland Lacher(Chairman), Dr. Christian Holtmann, Reiner Seiler (until September 18, 2002) andKlaus Hammen (since September 2, 2002).

Dr. Christian Holtmann resigned from the Managing Board at the close of12/31/02. Mr. Stefan A. Baustert was appointed on 1/15/03.

Kahl, March 20, 2003

The Managing Board

R. Lacher K. Hammen S. Baustert

Fix* Variable TotalKEUR KEUR KEUR

Roland Lacher 267 207 474

Dr. Christian Holtmann 189 207 396

Reiner Seiler 142 155 297

Klaus Hammen 63 69 132

Total 661 638 1,299

* Basic salery plus benefits as well as monetary equivalents

Company management board compensation 2002

| || | | | |G

LOSSA

RY OF TECH

NICA

L TERMS

P A G E1 1 1

> G L O S S A R Y O F T E C H N I C A L T E R M S

Blu-ray Disc New standard for optical storage medium with 27 Gigabyte storagecapacity for digital high definition TV (HDTV).

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 embed-ded in permanent microscopic pits on the CD surface. This informationcan only be read and not altered (audio, video computer); 650 mega-byte storage capacity; 780 nanometer laser wavelength; one polycar-bonate substrate (120 mm diameter; 1,2 mm thickness).

CD-ROM Compact Disc – Read Only Memory; optical data storage medium for prerecorded data (software). This information can only be read andnot altered.

CD-R Compact Disc – Recordable; optical data storage medium for personalarchiving (burning) of digital information; the CD-R can be recordedonly once, 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 anderased repeatedly.

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

DVD Digital Versatile Disc; optical medium for the storage of digitalinformation (audio, video, computer data); 9.4 Gigabyte max. storagecapacity; 650 nanometer laser wavelength; 2 polycarbonate substrates(10 mm diameter; 0.6 mm thickness each), individually produced,coated and subsequently bonded together. The digital information canbe 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 digitalinformation (data, software, games, etc.); the digital information canbe read but not altered.

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

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

DVD – 5 Digital Versatile Disc – 4.7 Gigabyte storage capacityDVD – 9 Digital Versatile Disc – 8.5 Gigabyte storage capacityDVD – 10 Digital Versatile Disc – 9.4 Gigabyte storage capacity

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

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

DVD-RAM Digital Versatile Disc – Read Access Memory; optical data storage medium for repeated digital recording for PC and video applications.(Format of i.e. Hitachi).

DVR Digital Versatile – Rewritable; new optical data storage medium still in the development stages, for digital high definition TV (HDTV),approx. 25 Gigabyte storage capacity.

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

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

Metallizing Application of a thin layer of metal (aluminum, gold, silver) or silicononto a CD or DVD disc; this reflective layer serves to reflect the laserbeam; 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 anTechnology amorphous into a crystalline state and back again.

P A G E 1 1 2

| || | | | |G

LOSSA

RY OF TECH

NICA

L TERMS

P A G E1 1 3

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 withhighly uniform reflective layers.

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

SPACEBonder Bonding system for DVD.

Injection mouldingmachine Injection moulding machine for production of disc.

Sputtering The process by which a thin layer of metal or silicon isdeposited 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.

STREAMLINE DVDR/SP Fully automatic replication line for DVD±R.

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

Uniformity Even distribution of layers on a disc.

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

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

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

P A G E1 1 4

> S I N G U L U S T E C H N O L O G I E S A G D E C L A R AT I O N

I N A C C O R D A N C E W I T H § 161 A K TG

The German Code of Corporate Governance Recommendations as revisedfollowing an August 20, 2002, notice by the German Federal Ministry of Justice(“Code”), were complied with in fiscal 2002 and are currently being compliedwith. Exceptions to the recommendations follow: 1. In lieu of a deductible on its D & O liability insurance policy, the cor-

poration and its directors and officers agreed that the resultant D & Oinsurance premium will be borne by the directors and officers themselves(Cod Fig. 3.8, Par. 2).

2. In place of a statutory resolution on the retirement age for ManagingBoard members, the Supervisory Board bylaws have established that the retirement age will be considered during succession planning (CodeFig. 5.1.2, Par. 2).

3. Caucuses have not and will not be formed as long as the SupervisoryBoard is comprised of just three members (Code Fig. 5.3.1 and 5.3.2).

4. In place of a statutory resolution on the retirement age for SupervisoryBoard members, the Supervisory Board bylaws have established that theretirement age will be considered when nominating rights are exercisedfor new elections (Code Fig. 5.4.1).

Kahl, February 20, 2003SINGULUS TECHNOLOGIES AG

Alexander von Engelhardt William Slee Thomas GeitnerRoland Lacher Stefan A. Baustert Klaus Hammen

> S U P P L E M E N TA L D E C L A R AT I O N

Fig. 1 of the compliance declaration originally submitted by the Managingand Supervisory Boards in accordance with §161 AktG stipulated that, in lieu of a deductible, the corporation and its directors and officers had agreed thatmembers would each pay one-third of the premium for their D & O liabilityinsurance.

The corporation has since reached an agreement with its directors and officerswhereby members will carry the entire cost for the D&O insurance premium.The directors and officers are aware of their stewardship role in the companyand hence will assume the costs of the insurance designed to protect thecorporation from liability resulting from member misconduct.


1999

2000

2001

2002

177,3

375,7

225,5

290,5

400 350 300 250 200 150 100 50 0


1999

2000

2001

2002

100 90 80 70 60 50 40 30 20 10 0

44,8

93,4

40,2

52,7



■ Net Income

1999

2000

2001

2002

100 90 80 70 60 50 40 30 20 10 0

48,794,7

27,942,5

36,654,5

23,845,5

N E T I N C O M E (%)

E A R N I N G S P E R S H A R E (EUR, DVFA / SG)

1999

2000

2001

2002

16 14 12 10 8 6 4 2 0

14,2

14,1

13,1

13,1

1999

2000

2001

2002

2,00 1,00 0

0,66

1,35

0,77

1,01


1999

2000

2001

2002

50 45 40 35 30 25 20 15 10 5 0

25,65

49,96

29,61

38,3

Imprint

Published bySINGULUS TECHNOLOGIES AG, Kahl/Main

ProductionMetaCom Corporate Communications GmbH,Hanau

Conception and IdeaBernhard Krause

TextDr. André Hülsböhmer,Bernhard Krause,SINGULUS TECHNOLOGIES AG

ArtworkJens Gloger, Andrzej Korzec

DTPMetaCom Corporate Communications GmbH,Andrzej Korzec

PhotographyViktor DieboldWerksfotos SINGULUS TECHNOLOGIES AGBilderdienste

PrintingBraun & Sohn, Maintal

Printed on chlorine-free bleached paper



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


28.03.03 Quarterly Report 4/2002 and Annual Closing 2002

Annual Press Conference, 10:00 am, Commerzbank

DVFA-Meeting, 1:00 pm, Commerzbank, Frankfurt/Main


15.05.03 Analyst/Investors Meeting, Las Vegas, USA

26.05.03 Annual Shareholders Meeting, 10:30 am,

Deutsche Bank, Hermann-Josef-Abs Saal, Frankfurt/Main



C O M PA N Y C A L E N D A R 2 0 0 3

1999 2000 2001 2002

KEUR KEUR KEUR KEUR

Gross Revenues 177,258 375,722 225,525 290,548

Profit bevore Tax 45,493 94,724 42,448 54,521

Net Income 23,781 48,655 27,935 36,589




R & D Expenses 4,359 9,013 8,307 16,155

Staff* (31.12.) 212 319 367 502


|| | || | ||| || | | | | | | | ||| || | | D I G I T A L C O D E | | ||| || | ||| || | || | || | || | || | ||| | |

> AT A G L A N C E

| || | ||| || | | | | | | | ||| || | | D I G I T A L C O D E | | ||| || | ||| || | || | || | || | || | ||| | |



D - 63 796 Kahl

Fon +49 - 6188 - 440 - 0

Fax +49 - 6188 - 440 -110


www.singulus.de


| || | | ATA

GLAN

CE| |

||||||

|||| ||||||||||||

A N N U A L R E P O R T 2 0 0 2

ANNUAL REPORT 2002 - Singulus Technologies · 2016-01-04 · Deutsche Bank, Hermann-Josef-Abs Saal,...

Documents

Transcript of ANNUAL REPORT 2002 - Singulus Technologies · 2016-01-04 · Deutsche Bank, Hermann-Josef-Abs Saal,...