Annual Report 2000 Micronic Laser Systems AB ... - Micronic Mydata

Annual Report 2000Micronic Laser Systems AB (publ.)

The optical head with the final lens is a key sub system in the patterngenerators. One function is the auto focus mechanism. It is necessaryto keep the distance from the lens to the photomask blank accurate towithin a fraction of a micrometer during writing, to achieve good focusof the laser beams. (A human hair is approximately 60 micrometers.)

ContentsIn 2000, about 400 million mobile phones were soldaround the world.This figure is expected to rise by atleast 25 percent to 500 million in 2001. Each mobilephone contains a number of microchips (electroniccircuits) and a miniature display screen.The manufactureof these chips and the screen requires photomasks.Source: Svenska Dagbladet, January 2001.2000 in brief ......................................................................................................7Pushing the limits, CEO report............................................................11Micronic’s world............................................................................................14Market segments ..........................................................................................19Micronic’s share ............................................................................................24Micronic´s technology................................................................................28Products ............................................................................................................33Research & Development ......................................................................34Personnel ..........................................................................................................37Report of the directors............................................................................38Key ratios and definitions ......................................................................42Profit and loss accounts............................................................................44Balance sheets................................................................................................45Cash flow statements ................................................................................47Accounting principles ................................................................................48Notes on the financial statements ....................................................50Auditor’s report ............................................................................................62Management....................................................................................................65Board and auditors......................................................................................66Glossary ............................................................................................................69The Annual General Meeting of shareholders will be held at 5.00 pm on Tuesday March 13, 2001 at Åva Gymnasium,Täby, Stockholm.* Words marked * are explained in the glossary on page 69.

Micronic’s SLM* chip (Spatial Light Modulator) has a millionindividually controlled mirrors, each of them 16x16 micrometers.Thechip is the heart of the next generation patterngenerator for semiconductors. Micronic’s technology is basedon SLM which makes it possible to develop laser patterngenerators for a number of future chip generations.2000 in briefMicronic is a Swedish high-techcompany active in the development,manufacturing and marketing of aseries of extremely accurate laser patterngenerators for the production ofphotomasks used in microlithography.Microlithography is a technologywhich enables the electronics industryto mass-produce electronic componentssuch as displays and semiconductors.Micronic supplies theglobal electronics industry withinnovative patterning solutions.Until 1999, Micronic focused ondisplay pattern generators and todaythe company has 100 percent of themarket for state-of-the-art photomasks.During the fall of 1999,Micronic entered the semiconductormarket, a market which is ten timeslarger, and with a new set of challengesin terms of technologyrequirements and support.Micronic goes publicMicronic was listed on the OMStockholm Exchange’s “O” list onMarch 9, 2000. The offer was oversubscribed20 times.Strong first year as a supplier tothe semiconductor industryStrong sales to the semiconductormarket, with a number of systemsbeing shipped to prestigious customers.Micronic extended theOmega6000 product line to supportthe semiconductor industry from 0.5to 0.15 µm technology nodes.Record year for Micronic’sdisplay pattern generatorsBest year ever in the display segment.Micronic completed the developmentof a new generation ofadvanced pattern generators for displaysand shipped several systems. Anew generation pattern generatorwas launched within the multi purposesegment.Break-through for Micronic’sSLM technologyIn September, Micronic presentedthe SLM* (Spatial Light Modulator)technology, which generated considerableinterest within the industry.A break-through order for a Sigmasystem based on the SLM technologywas received from DuPont Photomasks,Inc. in October.Exclusive license agreementMicronic extended its partnershipwith Fraunhofer Institute IMS byacquiring an exclusive world-widelicense which covers all semiconductordirect-write applications basedon Micronic’s new use of the SLMtechnology.Investing for growthDecisions were taken to investMSEK 100 in extending the facilitiesin order to double the manufacturingcapacity in Täby, and toinvest MSEK 80 in process andmeasurement equipment.New President in March 2001Micronic’s board of Directorsappointed Sven Löfquist, the presentexecutive vice president, as newPresident and CEO of the company,effective from March 13, 2001. TheBoard intends to nominate BertJeppsson, the present president andCEO, as executive chairman of thecompany from the same date.Six year financial reviewMSEK 1995 1996 1997 1998 1999 2000Order intake 100 215 315 168 292 759Order backlog, 31 Dec. 103 170 219 117 194 307Net sales 81 145 259 268 213 704Operating profit 15 45 56 44 -74 83Operating margin, % 18.8 30.6 21.5 16.3 -34.4 11.8Earning per share before dilution, SEK 1) 0.79 2.74 3.34 2.24 -3.81 3.72Average number of employees 30 51 103 140 166 2401) Earnings per share is calculated on the number of shares at year-end.2000 in brief / 7

Global sales of stationary computers reached the 132 millionmark in 2000. Continued growth is expected, and by 2005,sales are expected to be in the region of 247 million units.Each computer contains a large number of different microchips.The manufacture of each chip requires 20–30 photomasks.Source: DisplaySearch, December, 2000.8 / 2000 in briefOrder intake 1995–2000MSEK80070060050040030020010001995 1996 1997 1998 1999 2000Net sales and operating margin1995–2000MSEK %8008070070600605005040040300302002010010001995 1996 1997 1998 1999 2000-10-20-30-40Legal action against competitorMicronic took legal action in theUnited States against Etec Systems,Inc. (an Applied Materials, Inc. company)in January 2000, including arequest that the court establish thatMicronic is not violating one ofEtec’s patents.Strong order increaseThe market recovery in Asia, combinedwith Micronic’s entry into thesemiconductor market during thelatter part of 1999 and during 2000,resulted in a significant increase inorders and invoicing of systems duringthe year. Order intake amountedto MSEK 759 (292), an increase of160 percent. Orders for 18 (9) systemswere received during the year.The closing order book amountedto MSEK 307 (210), all of which isexpected to be delivered and invoicedduring 2001.SEK350325300275250225200175150125100More than doubled net salesNet sales increased strongly by 231percent to MSEK 704 (213), including59 MSEK (39) from the globalservice activities. 17 (7) systems wereshipped during the year, of which twowere upgrades. Service accounted for8 (18) percent of sales. By the endof the year, Micronic had 34 (29)service contracts.High profitProfit after financial items amountedto MSEK 90 (loss 73). The strongprofit increase is attributable to thestrong increase in net sales.Expanding organizationThe organization has been strengthenedwith 98 new recruitments,bringing the work force up to 304,an increase of 48 percent. Most of theexpansion has taken place within thetechnical, production and developmentareas.Micronic Laser Systems, share price development 2000Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Roughly 50 million cars are sold every year around theworld. An electronic revolution is going on under thebonnets as mechanical components are replaced by electronicones, and more and more miniature displays arebeing installed. Ignition systems, brakes and electric windowsare now microchip controlled.The manufacture ofthese microchips and displays requires photomasks.Source:Volvo, January, 2001.Two customer segmentsMicronic’s primary focus is on displaysand semiconductors. There isalso a growing multi purpose segment,which includes passive displays,electronic packaging and otherniche applications.The relationship between consumerproducts and the demand forlaser pattern generators depends onseveral factors: one is that new consumerproducts often require newand more complex photomasks,another is that new production technologyrequires additional photomasks.Consequently, manufacturingcomplexities and new designsdrive sales of pattern generatorsrather than fluctuations in the volumeof chip production.Significant growth potential within Micronic's marketsUSD millionDataquest, an independent analyst,foresees significant growth potentialduring the next few years for patterngenerators in the semiconductorsegment.Micronic’s management expectsa sustained high rate of growth onthe display pattern generator marketin line with the market for the endproduct TFT-LCD.Overlapping customer basesMicronic’s customers include bothcaptive and merchant mask shops.Merchant mask shops supply themajority of semiconductor manufacturerssince they normally providethe most cost-effective solution.Captive mask shops produce for eachmanufacturer’s own internal use.502Micronic has a very strong positionin the display market and a numberof customers in the display marketalso manufacture photomasks for thesemiconductor industry. This is animportant driving force behindMicronic’s entry into the semiconductormarket. The company alreadyhas an established relationship withmany players in the semiconductorsegment, and this overlap also createssynergies within its customer supportactivities.The merchant mask shop segmentof the semiconductor marketaccounts for about 65 percent of thetotal market and is dominated by asmall number of companies. Themain players include DuPont Photomasksand Photronics in the UnitedStates, and Dai Nippon Printing(DNP), Toppan Printing and HoyaCorp. in Japan. (Source: DuPontPhotomasks, 1999).Introduce the SLM technology, addressingthe full semiconductor marketBecome leading supplier withinthe laser segment in the semiconductormarket270328DisplaySemiconductor16 / Micronic’s worldMaintain market leadershipwithin the display marketPGs for DisplaysSource: MicronicPGs for SemiconductorsSource: Dataquest, January 20011999 2000 20031999 2000 2002Micronic’s growth strategy is based on the three steps described above.254070LGMicronShashinKagakuDNPHoyaTMCToppanDuPontPhotomasksA number of Micronic’s customers are active in both thedisplay and semiconductor market, some of the largestcustomers are mentioned above.

Advanced optics is only one of the fields that are required indesigning a leading edge laser pattern generator. Precisionmechanics, high-speed electronics, real time software, parallelprocessing computers and system design are other areas thatare essential in building products that meet the very demandingrequirements of state-of-the-art photomask making.Maintaining our positionin the display segmentPhotomasks in the display segmentare used for various types of end products,from the traditional cathoderaytube* and flat-panel liquidcrystal displays (LCDs*), to the verylarge plasma display panels (PDPs*).Flat-panel displays are used ascomputer monitors in laptop computers,mobile phones, video camerasand information screens. The dominanttechnology in the market is theTFT-LCD* display.5–7 photomasks are used in themanufacture of a TFT display, whichalso includes a separately manufacturedcolor filter that requires anadditional 4–6 photomasks. Micronicmanufactures LCD display patterngenerators capable of producing photomasksover 1 x 1 meters square.Through our unique, patented writingstrategy pattern quality is maintainedover the entire patterned area.Traditionally TFT manufacturershave had two alternative lithographicproduction methods. Smallphotomasks or the large photomaskswritten in the Micronic systems. Forthe latest generations of TFT manufacturinglithography equipment isavailable only for large photomasks.This increases the available marketfor Micronic systems.The yearly average growth ratebetween the years 1999-2005 for theend product, the TFT-LCD, isexpected to be 23 percent (Source:DisplaySearch 2000). The TFT patterngenerator market in 2000 wasworth approximately MUSD 40, anincrease of over 100 percent in relationto 1999. Micronic estimates themarket for pattern generators toreach MUSD 70 in 2003.PDPs have emerged as an alternativeto CRTs and projectionscreens. PDPs are already in use invarious large area applications, suchas information displays. The drivingforce behind this technology is PDPas television – “TV on the wall”. Asyet, there has been no commercialbreakthrough, mainly for reasons ofcost. PDP photomasks are the largestof any application, up to 1.7 x 1.1meters. The market for pattern generatorsfor this application is currentlysaturated, but Micronic expects itto revitalize over the next few years.Inside every color cathode ray tube,there is a shadow mask. This is asheet of metal foil with millions oftiny perforations. The quality of theshadow mask determines the sharpnessof the TV or computer screen.The demands on the photomasksused to manufacture the shadowmasks are consequently very high.The market for pattern generators isrelatively mature and growth will belimited.In 2000, Micronic received fiveorders for advanced TFT patterngenerators, and one order for a PDPpattern generator. Eight display patterngenerators were shipped ofwhich one was an upgrade.The multi purpose segment consistsprimarily of small merchantmask shops. These are “multi-manufacturers”who manufacture everythingfrom passive displays andencoders to simple semiconductorsand electronic packaging. Withinthis segment in 2000 Micronic experiencedthe strongest growth withinelectronic packaging, a niche thatalso includes some major captivemask shops, such as IBM.Micronic received six orders forMP (multi purpose) systems and fourwere shipped during the year.Blete i bredo than illvilji och bres oaftton, klapp i tresgur vad inti ölstop kloff bard klän udan treffbyld. Ögge och trafla metingenprong sluf i asge dre joppulitation pryde krak i treften. Hjolk örv, sym blivte urtleprok och jyrträg. Blete i bredo thanillvilji och bres oaftton, klapp i tresgur vad inti ölstop kloff bard: klän udan treffbyld. Ögge och trafla met ingenprong sluf iasge dre joppulitation pryde krak i treften. Hjolk örv, sym blivte urtleprok och jyrträg.Market segments / 19

Developing a foothold in thesemiconductor segmentThe semiconductor industry grew by 37 percent in 2000. Globalsales are estimated at MUSD 232, and production volumes at about80 billion microchips.This is equivalent to just over 13 microchipsfor every person in the world. Growth for 2001 is expected to be11 percent, followed by a modest decline to 8 percent in 2002.The manufacture of each chip requires 20–30 photomasks.Source: Dataquest, October 2000 and VLSI Research, January 2001.Semiconductor components are thebuilding blocks of all modern equipment.They can be found in everythingfrom mobile phones, cars andcredit cards to computers.A key component in the manufactureof semiconductors is the photomask– also called the reticle*.One semiconductor chip may requiremore than 25 layers of different patterns,each of which will require aunique photomask. The productionof a high quality photomask requiresa pattern generator with extremelyhigh resolution and precision.Dataquest estimates (January 2001)that the pattern generator marketwill be worth MUSD 328 in 2000,divided evenly between laser andelectron-beam, and expects it togrow to MUSD 409 in 2001 andMUSD 502 in 2002. The forecastcorresponds to a 23 percent compoundannual growth rate. Typically stateof-the-artsystems dominate sales.In 2000, Micronic received ordersfor six (including the Sigma) laserpattern generators for the productionof semiconductor photomasks. Ofgreat importance was the order forthe first Sigma system, based on thenew SLM technology. The technologyrepresents a major break-throughfor cost-effective manufacture ofphotomasks for the 0.13 µm technologynode and beyond. The SLMtechnology challenges the prevailingperception of what a laser patterngenerator can achieve. The Sigmaoffers the resolution of an electronbeamsystem coupled with the productivityof a laser system.Laser vs. E-beamHighOmega6000LaserSLMMicronic will deliver a pattern generatorwith the resolution of an e-beam and theproductivity of a laser.ProductivityE-beamLowLow Resolution High20 / Market segmentsThe SLM-technology was introduced in the third quarter 2000.The first SLM order was booked early in the fourth quarter the same year.

The competitive pictureMicronic is the undisputed leader onthe market for advanced displays,with 100 percent of pattern generatorsfor large area photomasks, usedprimarily for TFT-LCDs.In the shadow mask market segment,Micronic estimates its marketshare at 100 percent.During 2000, Micronic launchedseveral new products for the multipurpose segment: the MP80+, theMP170+ and the MP23. A numberof orders have already been receivedand the company is well positionedto take a significant market share.It is difficult to assess the size of thismarket since the rapid changesoccurring make it more difficult toanalyze.The market for pattern generatorsfor the semiconductor industryis divided into two, different types ofproducts – electron-beam or laserbased systems.The US-based Etec Systems, Inc.(an Applied Materials, Inc. company)is the dominant supplier and offersproducts of both types. In the electron-beamequipment area, Eteccompetes with suppliers such asToshiba, JEOL, Hitachi and Leica.Until 1999, Etec was the sole supplierof laser-based pattern generators.Since then, Micronic has received anumber of orders, which has resultedin Micronic receiving a 15 percentmarket share already after a year.Market shares 2000Display Pattern GeneratorMarket MUSD 40Semiconductor Pattern GeneratorMarket MUSD 328In the semiconductor systems the photomaskblanks are loaded onto the writing stage usinga precision robot.The systems can handledifferent sizes of the blanks to meet variouscustomer requirements.Laser100%E-beam50%Laser50%Micronic100%ToshibaJeolEtecLeicaMicronic 15%Etec 85%Micronic has in a year built a significant market share in thesemiconductor market.The display market continues to betotally dominated by Micronic.The competitive picture / 23

Micronic on the stock marketMicronic’s shares were floated on theOM Stockholm Exchange’s “O” liston March 9, 2000.At the time of the IPO there wasgreat interest in acquiring shares inMicronic Laser Systems AB frominstitutional investors, employees andthe investing public, and the issue,of 6,031,500 shares, was 20 timesoversubscribed. Over and above this,the issuing houses had options toacquire a further 873,625 shares toprovide additional allotments.The issue price was establishedat SEK 105 per shares by means ofa tender procedure. The total proceedsof the issue thus amounted tosome MSEK 633. The proceeds ofthe accompanying rights issue of4,500,000 shares amount to someMSEK 473 before issue costs.Following the issue, the total numberof stockholders was around6,000. Micronic’s main stockholder,the Industrifonden Foundation owned32.5 percent of the capital and votesat the time of the issue.The issue was handled by twoissuing houses, D. Carnegie AB andRobertson Stephens InternationalLimited.Share price and turnoverThe shares were listed on the OMStockholm Exchange’s “O” list witheffect from March 9, 2000. By theend of the first day of trading, theprice had risen to SEK 205.50, andat the end of 2000, the share pricewas SEK 279, an increase of 169percent on the issue price, givinga market capitalization of MSEK5,329.The total number of Micronicshares traded between March 9,2000 and December 31, 2000amounted to 15,145,101, which isequivalent to 79.3 percent of thetotal number of shares.Micronic’s shares have performedstrongly since March 9, 2000 despitethe bearish trend on the stock market.According to several businessmagazines, including Finanstidningenand Dagens Industri, Micronic’s IPOwas one of the most successful in2000.During the course of the year,the number of shareholders declinedfrom the opening 6,000 to about4,500 on December 29, 2000.Since January 2, 2001, Micronichas been on the Stockholm Exchange’s“Attract 40” list based onthe share’s high turnover.Micronic’s personnel own anaggregate of some 1,109,806, or some6 percent, of the company’s shares.The management and membersof the Board own 1,109,606 shares,or 5.8 percent of the capital.757 institutional shareholdersown some 84 percent of the capital.Issue priceSEK 105SEK Micronic Laser Systems Afv General index Traded number of shares in 1000s per week (includes after market)3503253002752502252001751501251007550March April May June July Aug Sep Oct Nov DecSharesin 1000s140012001000800600400200024 / Micronic on the stock marketMicronic on the stock market / 25

Micronic’s 15 largest shareholders/nominees December 29, 2000Shareholder Capital/votes %Industrifonden Foundation 3,550,000 19State Street Bank and Trust Co. 2,392,257 13Chase Manhattan Bank 1,332,883 7Cmblsa Re Omnibus Account 1,186,878 6Smith Barney Inc. 950,000 5DGZ German Account Chase Manhattan Bank 507,450 3Royal Bank of Canada Ltd. 466,335 2Fidelty Funds – Nordic Fund 336,900 2Daiwa Secs TR & Bank (EUR) PLC 281,236 1Pictet & CIE 233,000 1Trade Control Unit State Street Bank and Trust 229,750 1Hagströmer & Qviberg Strategic Fund 180,000 1Hurtig, Carl Robert 177,900 1NB Sweden Fund 169,700 1Fidelty FD-Europe Small Comp 161,900 1Total 15 largest shareholders/nominees 12,156,189 64Shareholders by country of domicile December 29, 2000Shareholder Capital/votes %Domiciled in Sweden 8,901,380 47Domiciled outside Sweden 10,199,203 53Total 19,100,583 100The following investment banks,brokerages and analysts followand report on Micronic.December 31, 2000Alfred Berg, SwedenArosMaizels, SwedenCarnegie, SwedenCazenove, Great BrittainDeutsche Bank AG, GermanyNordiska, SwedenRedeye, SwedenRobertson Stephens, USAStockwords, SwedenSwedbank, SwedenChanges in share capitalIncrease in Increase in share Total no. Total share Par value,Year Transaction no. of shares capital, SEK of shares capital, SEK SEK1989 Company founded 500 50,000 1001989 New issue 9,500 950,000 10,000 1.000,000 1001989 New issue 6,000 600,000 16,000 1,600,000 1001990 New issue 3,300 330,000 19,300 1,930,000 1001994 New issue 1,801 180,100 21,101 2,110,100 1001997 Share dividend and split 8,440,400 8,440,400 10,550,500 10,550,500 11997 New issue 1,450,000 1,450,000 12,000,500 12,000,500 11998 New issue 2,000,083 2,000,083 14,000,583 14,000,583 12000 New issue 4,500,000 4,500,000 18,500,583 18,500,583 12000 Exercise of equity warrants 600,000 600,000 19,100,583 19,100,583 1Data per shareEquity and earnings per share, calculated on year-end numbersMSEK 1995 1996 1997 1998 1999 2000Equity per share before dilution 1.22 3.95 7.4 13.61 10.1 35.58Equity per share after dilution – – – – – 33.65Earnings per share before dilution 0.79 2.74 3.34 2.24 -3.81 3.72Earnings per share after dilution – – – – – 3.52Dividend per share – – – – – –Listed price December 29 279P/E ratio before dilution 75P/E ratio after dilution 79Share price/equity before dilution, % 787Share price/equity after dilution, % 82926 / Micronic on the stock marketShare capitalNo. of shares % No. of votes %19,100,583 100 19,100,583 100Shareholdings by size December 29, 2000No. of No. of sharesSize of shareholding share holders and votes %1–100 2,481 203,464 1.07101–1 000 1,614 659,689 3.451 001–5 000 246 572,325 3.005 001–20 000 75 846,719 4.4320 001–100 000 67 3,350,450 17.54100 001– 26 13,473,876 70.54Nominee diff 1 -5,940Total 4,510 19,100,583 100Micronic on the stock market / 27Source:VPC AB. Direct and nominee holdings as per December 29, 2000.

Micronic’s technologySemiconductorMicronic’s pattern generatorStepper28 / Micronic’s technologyMicrolithographyThe technology used to image a patternfrom a photomask onto e.g. asilicon wafer coated with photoresist, is called microlithography.The photomask is used to transfer animage composed of microscopicallysized structures, in a repeated fashionacross a display substrate or a siliconwafer.The process for making a chip,which is similar to manufacturing adisplay, begins with the design ofa circuit. Circuit designers useadvanced CAD* and CAE programswhich generate a pattern layout, “ablue print”, of the chip. To producethe photomask, the layout-informationis transferred to the Microniclaser pattern generator. The informationis converted to a suitable formatand processed as the pattern is beingwritten. The machine uses one ormore laser beams to write the patternon a glass plate that is covered with athin layer of chrome and with a lightsensitive material called photoresist*.The glass plate is then developedand etched. The final result is aglass plate with a chrome pattern – aphotomask*.The glass plate functions as an exactnegative of the desired circuit patternand can be projected onto varioustypes of photoresist covered substrates.Using this method, the electronicsindustry can mass-producecomponents such as TV-tubes, flatpanel displays and integratedcircuits*, in a cost effective way.Micronic laser pattern generators –scalable technologyMicronic’s traditional laser patterngenerators use what is called rasterscanningtechnology. The photomaskabout to be exposed is placed on anxy-stage which moves in one direction,while the laser beam, whichis controlled by an acousto-opticdeflector*, sweeps perpendicularto the direction that the stage ismoving in. This produces a small,exposed strip on the photomask. Thestage moves to the next position anda new strip is exposed. This continuesuntil the entire photomask iscovered by a number of adjacentstrips. To transfer the pattern information,the intensity of the laserbeam is changed, using an acoustoopticmodulator*. Micronic’s lasersystems are available for differentphotomask sizes ranging from 230 x230 mm to 1,100 x 1,700 mm. Thesystems that write large displayshave a moving final lens and a stagethat only moves in one direction,which reduces the size of the system.The laser pattern generatorfor the futureThe development in the semiconductorsegment is moving towardsmaller and denser circuit designsand thus more structures in eachmicrochip. To meet market demandsfor higher resolution, combinedwith higher writing speed, Micronictogether with the FraunhoferInstitute IMS, has developed a newtechnology called SLM*. The abbreviationstands for Spatial LightModulator, a microchip that containsone million small, individually controlledmirrors. The technologyallows the use of light sources withextremely short wavelengths, whichis a condition for achieving higherresolution. It is possible to useDUV* (Deep Ultra Violet) lasers,but also even shorter wavelengths,which is expected to eliminate thecurrent limitations of laser basedsystems.Data fileThe patterns are created usinga CAD system.The data is transferredto the Micronic laserpattern generator where it isprocessed to a suitable formatfor writing.DisplayData fileThe workflow for display photomasksis basically the same asfor semiconductors, but a muchlarger photomask blank used.The photomask blank is thenexposed by controlling a laseraccording to the pattern.Micronic’s pattern generatorAfter processing, the photomaskis used in a lithographicexposure system, astepper, where the pattern istransferred to a semiconductorwafer.The pattern size isreduced 4 times in the stepper.PhotomaskPhotomaskAlignerMicrochipAfter exposure thewafer is processed toform the transistorsand conductors.Theprocess is repeated20–25 times with adifferent photomaskeach time.DisplayThe exposure system that uses the photomask inthe manufacturing of TFT-LCDs does not reduce thepattern size and exposes the entire or, a large partof the TFT glass substrate simultaneously.The TFTprocess normally uses 5 to 7 different photomasks.The finished microchipis tested and packagedand can then be usedin electronic equipmentsuch as laptopcomputers.The finished displayis then used in e.g.laptop computers.Micronic’s technology / 29

Data channelLaserBeam-splitterAOM*The Omega writing principleThe Omega is a raster scan system.Theentire surface of the photomask is scannedby the laser while the laser intensity ismodulated according to the pattern data.This is done by placing a photomask blankon an XY stage.The stage moves in onedirection while the five laser beams scanperpendicular to the stage movement.This creates a patterned strip on thephotomask.This process repeats until thephotomask has been exposed.24.4 billion laptops were sold in 2000.This is equivalent to almost20 percent of all computers.The market for laptops is growing rapidly,and by 2005, it is estimated that every fourth computer will be alaptop. Each laptop has an LCD display screen, the manufacture ofwhich requires 5–7 photomasks. Each laptop also contains a numberof microchips, the production of which also requires photomasks.Source: DisplaySearch, December 2000.Pattern dataAOD*Sweep startX-positionY-positionInterferometer*LaserPulsed excimer laserInterferometerX-positionPattern rasterizerSLMBeam-splitterLensApertureLensThe SLM writing principleThe SLM technology uses a massively parallelpatterning principle.The SLM consistsof a chip with one million individually controlledmicro mirrors. A part of the patternto be written is loaded into the SLMand a pulse from the exposure laser isreflected off the SLM.This is projected onthe photomask, which is exposed with asmall part of the pattern.The stage movescontinuously and when the position for thenext part of the pattern is reached thelaser flashes again, exposing the photomask.During the stage movement theSLM is reloaded with the data for nextpart of the pattern.The process continuesuntil the entire photomask has beenexposed.Y-positionInterferometer*30 / Micronic’s technologyLaser

The writing unit of the Micronic pattern generators are enclosed in a climatechamber.The temperature is controlled to typically within 0.01 ºC to ensureaccurate pattern placement.There are air filters in the chamber that removeparticles that could cause defects on the photomasks.ProductsOmega6000 for semiconductorapplicationsThe Micronic Omega6000 productline of laser pattern generators offersstate-of-the-art photomask makingcapability for technology nodes to0.15 µm. The design and functionalityis based on the experience ofmore than a decade of shippingMicronic laser pattern generators.The Micronic Omega6000 includesfour different systems thatgive our customers the capability tooptimize their production capacity ata highly competitive cost of ownership.The Omega6000 operates at413 nm wavelength and prints oncommonly used i-line resists*.Micronic offers upgrades within theOmega6000 product line, allowingthe mask shop to extend their capabilityas their product mix develops.The product line includes Omega-6005, Omega6050, Omega6500 andOmega6600.Sigma – the laser pattern generatorof the future for semiconductorapplicationsMicronic has created Sigma to meetthe increasing demands on photomasksfor the semiconductor industry.Current pattern generator architecturesusing a limited numberof scanning beams will not be ableto support future productionrequirements with ever-increasingdata complexity and resolution.Sigma represents a paradigm shift inpattern generation and is based on aspatial light modulator (SLM*) witha million microscopic mirrors thatimage the pattern onto the photomask.The first Sigma is designed forthe 0.13 µm technology node and itoperates at 248 nm wavelength.With Sigma, Micronic provides patterningsolutions today and in thefuture allowing the semiconductorindustry to continue its lithographysuccess with cost efficiency.LRS11000 for display applicationsThe Micronic LRS11000 productline of laser pattern generators aredesigned for high quality displayphotomasks. The field proven performancewith unsurpassed “mura”control (elimination of sources tovisual errors in a display, such asstripes) have made the systems the defacto industry standard for large areadisplay applications. The MicronicLRS11000 product line includessystems optimized for different kindsof display applications allowing theuser to select the system ideal for hisrequirements.MP product line – flexiblephotomask makingThe Micronic MP product line consistsof technologically advancedlaser writing systems designed tomeet a wide range of requirements.Flexibility combined with high writingspeed and good image qualitymakes the Micronic MP80+ wellsuited for STN-LCDs, encoders, andelectronic packaging applications.MP170+ is targeted at the very largephotomasks for PDP*.MP23 has a high resolution andis targeted at wafer level and chipscale packaging.Semiconductor productsSystem Application Target nodeOmega6005 Semiconductor 0.5–0.35 µmOmega6050 Semiconductor 0.25 µmOmega6500 Semiconductor 0.18 µmOmega6600 Semiconductor 0.15 µmDisplay productsSystem Application PhotomasksizeLRS11000- TFT-LCD LargeTFT MB3LRS11000-CF LCD Color Filter LargeLRS11000-30S CRT LargeMulti purpose productsSystem Application PhotomasksizeMP80+ Multi purpose MediumMP170+ PDP, Multi purpose Very largeMP23 Multi purpose SmallProducts / 33

Research and developmentElectronic games and entertainment are one of the forces drivingthe semiconductor market, and they are contributing to thegrowth in digital platforms that integrate and combine digitalconsumer products. Sales of the world’s most popular computerentertainment system, Sony PlayStation, have exceeded 30 millionover the past five years. Each unit contains a large number ofelectronic circuits.The manufacture of these electronic circuitsrequires a considerable number of photomasks.Source: Svenska Dagbladet, January 200134 / Research and developmentTechnical diversity and depthOptics, laser technology, automaticcontrol engineering, data processing,and precision mechanics are some ofthe important areas where Micronicis in the technological forefront.The competence and motivation ofMicronic employees are essential factorsthat help maintain this position.Micronic has an open and relaxedatmosphere where work that reachesacross the various technical disciplinesis a requirement as well as personallystimulating. Everyone is deeply involvedin reaching the nanometricprecision that the customers demand,from production to service. In thepast year, about half of the company’semployees were engaged in researchand development. R&D costs accountedfor 27 (32) percent of the company’ssales in 2000.The next generationThe evolution of semiconductors leadsto circuits with smaller features anddenser patterns every year. The challengesfor pattern generators are to beable to improve resolution and maintaina reasonable throughput. Foroptical systems higher resolutioneventually means shorter exposurewavelengths. Higher resolution alsomeans that increased writing speed isrequired if the write times should notincrease.To address these challenges Micronichas worked with the FraunhoferInstitute IMS to develop the SLM(Spatial Light Modulator) technology.The SLM is a microchip that containsan array of individually controlledmicro mirrors. The SLM is used in thenext generation Sigma pattern generator,which can be thought of as astepper with the SLM acting as a programmablephotomask. Pattern datais loaded into the SLM and a laserflash is reflected off the SLM andprojected onto the photomask blank.New data is loaded, a new laser flashand another pattern portion isimaged on the photomask blank. Thestepper analogy goes further. The stepperinfrastructure can be used: thesame lasers, the same optical materialsand similar photoresists. This meansthat the same resolution can beachieved as in a stepper. However, thefeature sizes are larger on a photomaskthan on a wafer since the stepperreduces the mask image four times.The Sigma can follow in the footstepsof the steppers using mature technologyto achieve a state-of-the-art patterngenerator.The high writing speed in theSigma is achieved using the SLM’smassively parallel architecture withone million pixels imaged at eachlaser flash. The Sigma represents aparadigm shift in photomask patterngeneration. The technology is scalableand can take the semiconductorindustry further from the 0.13 µmtechnology node to 0.10 µm, 0.07µm and beyond.PatentsMicronic’s aim is to maintain an activepatent program to protect the ideasfrom the research and developmentdepartment and to secure our longtermcompetitive advantage. At presentthe company has 21 priority-basedpatents of which seven have beengranted in several countries. Thepatents cover a variety of core technicalsolutions and unique designs. Astrategic subset is the patents thatconcern the SLM-technology. In thepast year Micronic has emphasizedincreasing immaterial assets byencouraging work that may lead topatents. This is done within the companyas well as in joint developmentwith customers and different researchinstitutes.Licensing to write directly on siliconThis past autumn Micronic acquired alicense from the Fraunhofer InstituteIMS to include all semiconductordirect write applications based onMicronic’s new use of the spatial lightmodulator (SLM) technology. With apattern written directly on silicon,rather than on a photomask, no stepperis needed. However, the patternhas to be written for each wafer. Thereis no ‘negative’ from which to printadditional copies, each silicon waferis an original. This method is mostapplicable to circuits development,prototype production for specializedcircuits of which only a few areneeded.

Micronic’s highly qualified staff constantly worksto improve the design of the pattern generators.A good knowledge of the customer applicationsis required to find the optimal solutions.PersonnelMicronic is going through a veryexpansive phase. In 2000 the companygrew from 206 to 304 employees(the figure includes 21 persons whowill start working during the firstquarter, 2001), an increase of 48percent. Micronic has been able torecruit many capable and talentedpeople, among them some of the topengineers and scientists. Micronic’sstrategy is also to recruit people withkey competence from other countries,where expertise from the semiconductorand display industry canbe found. These foreign employeesspend time in Sweden periodicallyand function as experts and mentors,conveying their knowledge to otheremployees.Facts about our employees98 people were hired during theyear. Employee turnover is very lowin the company. 257 people workat the Täby head office in Swedenand eight at the local office inGothenburg. There are 13 employeesin the USA working with marketing,service and application support.The 22 people in Japan and the fourin Taiwan are focused on service,support and maintenance of thesystems in Southeast Asia.The competence level of Micronic’semployees is very high, 50 percenthave academic degrees and 23 of themhave a licentiate or doctor’s degree.48 of the employees in Sweden arewomen and 20 of them have academicdegrees. The average age of thecompany’s employees is 37. Micronicis a multi-cultural company withemployees at the head office frommany countries including the USA,the People’s Republic of China,France, Lithuania and Poland.Competent and motivatedMicronic’s employees are entrepreneurialand highly motivated. Manyare attracted by the challenges andexcitement of cutting edge technology.New ground is broken and newsolutions tested; nothing is taken forgranted and there is plenty of roomfor brainstorming. The work atMicronic reaches over many disciplinesrequiring teamwork and cooperationand there is a strong sensethat everyone is going in the samedirection. The pace is high and individualinitiative is encouraged. Theorganization is characterized by competence,a wide scope of knowledge,openness and international mobility.Micronic has launched three warrantprograms for its employees since1997. 57 percent of the employeesnow own warrants to acquire sharesin the company. Also, 52 percent ofthe employees own shares in thecompany. In 2000 the bonus systemgenerated a good result. For 2001, acomprehensive bonus system will beintroduced for all employees.An emphasis on learningIn a company like Micronic it is ofcourse important to develop theoverall competence of the employees.New employees get introductorytraining at different levels and thereare further opportunities for trainingin Sweden and abroad. Day to daywork is very educational and there isplenty of opportunities for developingnew skills. At the same time, itis Micronic’s ambition to fullfilemployee wishes for further educationand developing their skills.Personnel / 37

Report of the Directors38 / Report of the DirectorsThe Board of Directors and thePresident of Micronic Laser SystemsAB (publ.) (Co. Reg. No. 556351-2374) herewith present their annualreport for financial year 2000-01-01–2000-12-31.OperationsMicronic Laser Systems is a Swedishhigh-tech company active in thedevelopment, manufacturing andmarketing of extremely accurate laserpattern generators to produce photomasks.The technology is calledmicrolithography. Micronic’s systemsare used by the world’s leadingelectronics corporations in the manufacturingof television monitors, flatpanel displays and semiconductorcomponents.Important events in 2000• Micronic was listed on the OMStockholm Exchange’s “O” list onMarch 9, 2000. The IPO createdconsiderable interest in the company.The offer was 20 times oversubscribed.The total volume oftransactions amounted to someMSEK 633, of which MSEK 473was raised by the issue of4,500,000 shares. The issue pricewas SEK 105.• Strong first year as supplier to thesemiconductor industry. Micronicextended the Omega6000 productline for semiconductor applications.The product line includesfour different systems with thecapacity to produce the mostadvanced photomasks within the0.15–0.50 µm technology node.• Record year for Micronic’s displaypattern generators. The developmentof a new generation ofadvanced laser pattern generatorsfor the display segment was completedand several systems wereshipped. A new generation of patterngenerators has been launchedin the multi purpose segment.• Launch of Micronic’s SLM* technology.In September Micronicpresented its Spatial Light Modular(SLM) technology, which has generateda great interest within theindustry. The first breakthroughorder was received in October fromDuPont Photomasks, Inc. for aSigma system based on the SLMtechnology.• Micronic extended its partnershipwith Fraunhofer Institute IMS byacquiring an exclusive world-widelicense which covers all semiconductordirect-write applicationsbased on Micronic’s new use of theSLM technology.• A decision was taken to investMSEK 100 to double productionand office space in Täby. A decisionwas also taken to investMSEK 80 in process and measurementequipment.• The Board appointed SvenLöfquist as new President ofMicronic Laser Systems AB, effectiveMarch 13, 2001. The Boardintends to nominate Bert Jeppsson,the present President, as executivechairman of Micronic Laser SystemsAB in connection withthe Annual General Meeting onMarch 13, 2001.• Micronic took legal action in theUnited States against Etec Systems,Inc. (an Applied Materials, Inc.company) in January 2000, includinga request that the court establishthat Micronic is not violatingone of Etec’s patents.The Micronic Group –December 31, 2000The Micronic Group consists of theparent company, and its whollyowned subsidiaries, Micronic JapanK.K., Micronic Treasury AB,Sweden, and Micronic Laser SystemsInc., USA. Micronic Japan K.K. is aservice and support company withlocal service offices close to the company’scustomers in Japan. MicronicTreasury AB serves an intermediaryfunction in connection with stockoption plans set up for the company’semployees and the warrant programplaced with DuPont Photomasks.The business in the USA has beenconducted through the legal entityMicronic Laser Systems Inc. sinceJanuary 1, 2000. The company providesservice and support for existingand potential customers, and willstrengthen Micronic’s global marketingby giving it a higher profile onthe US market. Micronic’s businessin Taiwan will be reorganized into aseparate company in the first halfof 2001.OptionsMicronic’s first stock option plan wasset up in 1997, and involved theissue of 600,000 equity warrants.The subscription period extendeduntil June 30, 2000 and the subscriptionprice was SEK 52 per share.All the warrants were allotted andconverted in 2000.In 1998, a second option planwas set up involving 120,000 equitywarrants entitling holders to subscribeto the same number of sharesat any time up to October 31, 2001at a price of SEK 55 per share. Thenumber of unallotted warrants is18,000, which the Board has decidedto cancel.In 1999, the third employeestock option plan was introduced,involving 350,000 equity warrantsentitling holders to subscribe tothe same number of shares at anytime between January 1, 2000 andDecember 31, 2002 inclusive at aprice of SEK 90 per share. The numberof unallotted warrants is 94,900,which the Board has decided to cancel.A fourth option plan was set upin connection with the Omega 6000order received from DuPont Photomasks.The customer is entitled tosubscribe to up to 736,050 equitywarrants that will entitle it to subscribeto the same number of shares.DuPont Photomasks has already subscribed294,420 of these warrants.The equity warrants are allocated ininstallments based on an agreementbetween Micronic and DuPontPhotomasks. The allotted optionscan be exercised between January 1,2001 and December 31, 2003 inclusiveat a subscription price of SEK 60per share.Allotment of warrants is as follows (thousands):Option plan 2–3 4President 1) 0Management 100Other employees 192External business partners 0 294Not yet allotted 2) 65 442Unallotted for cancellation 113 0Total 470 7361) The current president has 212,500 call options onshares owned by major shareholders.2) The remaining unallotted warrants have not beengiven a value in the accounts.The Board will propose a fifth equitywarrant program to the AnnualGeneral Meeting on March 13,2001, for sale to employees inSweden and abroad during thespring of 2001.Orders and salesThe recovery of the Asian economiesduring the second half of 1999 andin 2000, coupled with Micronic’sentry onto the semiconductormarket, resulted in a substantialincrease in orders booked for andinvoiced sales of machines during theyear. The order intake for machinesrose by 160 percent (74) to MSEK759 (292).Orders were booked for a total of18 (9) systems in 2000. The closingorder book was worth MSEK 307(210), and these orders are expectedto be shipped in 2001.Net sales increased by no less than231 percent during the year toMSEK 704 (213), including MSEK53 (39) from the global servicebusiness. 17 (7) systems, of which 2upgrades, were shipped in 2000. Thevaluation of the order intake, salesand the order book is dealt withunder currency exposure.The service business continuedto expand in Japan, Taiwan and theUSA, and the number of employeesin these countries rose from 23 to 39over the year. Service accounted for8 percent (18), or MSEK 53 (39) oftotal sales in 2000. At the end of theyear, Micronic had 34 (29) servicecontracts with customers aroundthe world.Operating expensesOperating expenses including changein work in progress amounted toMSEK 621 (289) for the year, anincrease of 115 percent, of whichMSEK 191 (69) related to Researchand Development. The sustained andvigorous expansion of R&D in 2000focused on new technology withinall of the company’s product areas.The company recruited additionalpersonnel in Sweden and at its subsidiariesabroad to handle the growingvolume of shipments.ResultProfit after financial net for 2000amounted to MSEK 90 (loss 73). Themain factor behind the greatlyimproved result was the dramaticincrease in net sales.Report of the Directors / 39

Capital expenditureA decision was taken in 2000 toexpand operations in Täby by doublingproduction and office premisesto a total of 12,000 square meters atan estimated investment cost ofMSEK 100, of which MSEK 27 wasinvested in 2000. Plans have alsobeen made to invest MSEK 80 inmachinery and equipment. Theexisting premises were renovated forMSEK 7 (2) in 2000. Self-financedinvestments of MSEK 25 (6) weremade in equipment, instruments andcomputers and in leased equipmentof MSEK 5 (3). This gives totalinvestments of MSEK 64 (11).Liquid funds and financial positionThe Group was in a strong financialposition at the end of the financialyear. Closing liquid funds amountedto MSEK 319 (83), excludingunutilised overdraft facilities. Thesharp increase is due to the net effectof the stock issue and the proceeds ofthe exercise of warrants, which yieldedMSEK 468 during the year.The equity ratio was 72 percent(46) at year end.MSEK 186 of the closingaccounts receivable had been receivedby January 19.Cash flow analysisLiquid funds increased by MSEK236 (decline 67) to MSEK 319(83) during the year. Funds of MSEK121 (deficit 42) were generated fromoperations. Funds invested in workingcapital (excluding liquid funds)increased by MSEK 292 (17). Netfixed capital expenditure amountedto MSEK 65 (12), and funds fromexternal sources amounted to MSEK472 (4).Currency exposureSales are invoiced almost solely in USdollars, and 25 percent of the parentcompany’s operating expense isincurred in US dollars. The company’spolicy is to limit the effects ofcurrency fluctuations by regularhedging in accordance with companypolicy and Board directives.Currency effects that relate tothe valuation of the order intake,order books and invoiced sales aredealt with in accordance with thefollowing principles. The orderintake and invoiced sales are stated atthe respective spot rate. The closingorder book is valued at closing daterates for the period, taking relevanthedging contracts into account. Thismeans that the opening order bookfor 2000 has been revalued fromMSEK 194 to MSEK 210.Comparisons that include the closingorder book for 1999 are based onMSEK 210.Currency differences of an operatingnature are charged against otheroperating income or other operatingcosts, while currency differences ofa financial character are chargedagainst result from financial investments.Operating costs include acurrency difference item of MSEK 12while a negative currency differenceof MSEK 2 has been included in theresult from financial investments.Research and developmentR&D costs for 2000 correspond to27 percent (32) of the company’ssales. Apart from an increase of 39(13) in the number of personsemployed on R&D, considerable usewas made of external consultants andjoint research contracts.OrganizationThe business is conducted through aline-/project-based organization, inwhich separate areas of responsibilityhave been created for marketing,sales, strategic development, basedevelopment, system applications,production & installation, service,and finance & administration.During the year, the organizationwas expanded by 98 (55) to 304(206), or by 48 (36) percent; thisincludes 21 (15) persons, who willstart to work for the company duringthe first quarter of 2001. The mainareas where there has been an increasein personnel are technical, productionand development.Board activitiesThe Board held 13 meetings duringthe year. Several extra meetings wereheld during the spring of 2000,mainly relating to the planning andimplementation of the company’sflotation on the stock market, whichtook place on March 9, 2000. TheAnnual General Meeting for 1999was held on March 7, 2000. Theother meetings of the Board dealtwith the company’s developmentplans, planning, and normal business.No committees of the Boardmet during the year.Legal action in progressMicronic took legal action in theUnited States against Etec Systems,Inc. (an Applied Materials, Inc. company)in January, 2000, including arequest that the court establish thatMicronic is not violating one ofEtec's patents. In March, Etec filedan answer to the complaint, includinga claim that Micronic is infringingthis patent.Micronic has filed a motion with thecourt, on which the court has yet torule, asking that the court determinethat the patent at issue is invalid.Similarly, the court has not yet ruledon a motion filed by Etec which asksthe court to dismiss certain ofMicronic's other defenses to Etec'sclaims.A hearing was held on January24, 2001 regarding the proper constructionof the patent claims atissue. The court's ruling on claimconstruction is expected withinFebruary, 2001. No trial date has yetbeen set, nor is trial expected tocommence before fall, 2001.Future outlookMicronic’s largest markets are Japan,Asia and the United States.According to Dataquest, January2001, the wafer fab equipment marketis expecting a correction in order increase(an estimated growth of 11 percentfor 2001), after a record-breakinggrowth of over 70 percent in 2000.However, the forecast for the semiconductorphotomask and pattern generatormarket implies continued growth(an estimated growth of 25 percent).A large part of the wafer fab equipmentinstalled during 2000, willcome on line this year, requiring anincreased demand of photomasks forthe 0.18 and 0.15 µm node. In addition,the introduction of the 0.13 µmnode will trigger additional demandfor advanced photomasks during2001 and 2002. In this growingmarket we believe Micronic willcontinue to take market shares.The market for photomasks forthe production of TFT-LCD displayscontinues to be of high importancefor Micronic. Demands for increasedresolution and display size will createa demand for advanced pattern generatorsin 2001, but at a slightlylower pace than in 2000. We believethe size of our display market todouble within the next 2–3 years.Proposed disposition of earningsThe consolidated non-restrictedequity as stated in the consolidatedbalance sheet amounts to TSEK99,657 (28,204). It is proposed thatthe parent company’s unappropriatedearnings be dealt with as follows:2000 SEKRetained earnings 24,199,540Net income for the year 75,278,288Total unappropriated earnings 99,477,828To be carried forward 99,477,82840 / Report of the DirectorsTotal 99,477,828Report of the Directors / 41

Financial key figuresDefinitions of key ratiosFinancial key figuresMSEK 1995 1996 1997 1998 1999 2000Net sales 80.9 145.1 258.9 268.4 213.4 704.3MarginsGross margin, % 26.8 33.9 23.0 18.8 -30.2 14.1Operating margin, % 18.8 30.6 21.5 16.3 -34.4 11.8Profit margin, % 16.2 31.0 21.5 15.9 -34.1 12.8Capital returnReturn on operating capital, % 84 209 138 57 -67 30Return on capital employed, % 58 87 62 25 -31 19Return on shareholders equity, % 97 106 59 22 -32 17Capital structureOperating capital 22.5 20.5 61.3 92.8 128.5 423.0Capital employed 31.9 74.9 113.6 242.4 211.6 741.6Shareholders equity 14.6 47.4 88.8 193.4 141.4 679.5Interest-bearing net debt 7.9 -26.9 -27.5 -100.7 -26.7 -257.3Capital turnover rate, times 4.5 6.8 6.4 3.5 1.9 2.6Equity/total assets, % 29.7 39.6 49.3 65.6 45.7 71.9Cash-flow & liquidity 1)Net cash flow from operations 3.1 53.9 17.7 17.1 -59.0 -171.3Cash flow from capital expenditure 2.7 31.4 23.0 16.2 -12.3 -64.7Cash flow after expenditure, before financing 0.4 22.5 -5.3 0.9 -71.3 -235.9Closing liquid funds 9.4 54.4 50.0 149.6 83.0 318.7R&D 2)R&D expenditure – – 25.3 42.1 68.6 190.6R&D expenditure/sales, % – – 9.6 15.6 31.9 27.1EmployeesAverage number of employees 30 51 103 140 166 240Sales per employee 2.7 2.9 2.6 1.9 1.3 2.9Value added per employee 1.4 1.6 1.2 1.0 0.3 1.2Data per shareBefore dilutionNumber of shares at year-end, millions 12.0 12.0 12.0 14.0 14.0 19.1Number of shares, average, millions 12.0 12.0 12.0 13.8 14.0 18.1Earnings per share, SEK 0.79 2.74 3.34 2.27 -3.81 3.93Equity per share, SEK 1.22 3.95 7.40 13.81 10.10 37.54Dividend – – – – – –MarginsGross profit marginProfit before depreciation as a percentageof net sales plus other operatingincome.Operating marginOperating profit as a percentage ofnet sales plus other operating income.Profit marginProfit after net financial items as apercentage of net sales plus otheroperating income.ReturnReturn on operating capitalOperating profit as a percentage ofaverage operating capital.Return on capital employedProfit after financial items plusfinancial costs as a percentage ofaverage capital employed.Return on equityProfit after full tax (tax paid plus 28percent of changes in untaxed reserves)as a percentage of average shareholders’equity.Capital structureOperating capitalTotal assets reduced by non-interestbearingliabilities including deferredtax liability in untaxed reserves andliquid funds.Capital employedTotal assets reduced by non-interestbearingliabilities including deferredtax liability in untaxed reserves.Shareholders’ equityStated shareholders’ equity plus 72percent of untaxed reserves.Interest-bearing net debtInterest-bearing liabilities less liquidfunds as defined below.Capital turnover rateNet sales divided by average operatingcapital.Equity/total assetsShareholders’ equity as defined aboveas a percentage of total assets.Cash flow and liquidityNet cash flow from operationsProfit/Loss after financial itemsadjusted for items not included incash flow, income tax paid andchanges in working capital.Cash flow from capital expenditureNet capital investments in buildings,machinery, equipment andfinancial fixed assets.Cash flow from capital expenditure,before financingNet cash flow from operationsincluding change in working capitalless capital expenditure.R&DR&D expenditureCosts attributed to R&D activitiesincluding costs of personnel engagedin R&D work.R&D expenditure/salesCosts attributed to R&D as a percentageof net sales plus other operatingincome.EmployeesNumber of employeesAverage number of full-timeemployees.Sales per employeeNet sales divided by the number ofemployees.Value added per employeeProfit before depreciation and personnelcosts divided by the averagenumber of employees.Data per shareNet profit/loss per shareNet profit after full tax, divided bythe average number of shares.Shareholders’ equity per shareShareholders’ equity as defined abovedivided by the average number ofshares.42 / Financial key figures1) The cash flow analyses for 1995, 1996 and 1997 relate to the parent company Micronic Laser Systems AB.2) As the acounting system did not support separate accounting for R&D in 1995 and 1996, no information is available abount the exact level of R&D costs in those years.R&D costs for 1995 and 1996 are included in other operating costs.Liquid fundsCash, bank deposits and short-terminvestments.Definitions of key ratios / 43

Profit and loss accountsBalance sheetNotes Group Parent companyTSEK 2000 1999 2000 1999Net sales 1 704,342 213,413 665,247 196,703Change in work in progress 14,791 6,456 14,791 6,456Other operating income – 1,467 – 1,113719,133 221,336 680,038 204,272Operating costsInput items and supplies -172,987 -37,155 -164,840 -34,242Other external costs 2 -256,795 -117,955 -250,343 -113,448Personnel costs 3 -178,184 -108,563 -155,611 -101,045Depreciation of tangible fixed assets -15,903 - 8,999 -14,012 -8,642Items affecting comparability 4 – -22,518 – -22,518Other operating costs -11,897 – -11,881 –-635,766 -295,190 -596,686 -279,895Operating profit/loss 83,367 -73,854 83,352 -75,623Result from financial investmentsDividend from group companies 5 – – 800 1,500Interest income and similar items 6 9,445 3,231 9,549 3,2109,445 3,231 10,349 4,710Interest costs and similar items -2,768 -2,720 -2,382 -2,347-2,768 -2,720 -2,382 -2,347Profit/loss after financial items 90,043 -73,343 91,319 -73,260AppropriationsChange in tax allocation reserve – – – –Difference between book depreciation anddepreciation according to plan – – 578 1,7390 0 578 1,739Profit/loss before tax 90,043 -73,343 91,897 -71,521Notes Group Parent companyTSEK 31 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999ASSETSFixed assetsTangible fixed assetsLand and buildings 8 50,572 44,814 50,572 44,814Machinery 9 161 257 161 257Equipment 10 32,781 17,264 24,244 13,865Construction in progress 11 26,759 0 26,759 0110,273 62,336 101,736 58,937Financial fixed assetsShares in group companies 12 – – 7,514 762Receivables from group companies 13 – – 3,215 6,192Other long-term receivables 14 2,050 21,508 80 20,2422,050 21,508 10,809 27,196Total fixed assets 112,323 83,844 112,544 86,133Current assetsInventories 15Input items and supplies 96,903 38,663 92,298 32,771Work-in-progress 66,967 52,176 66,967 52,176163,870 90,839 159,265 84,947Current receivablesAccounts receivable 308,647 29,224 300,335 20,365Receivables from group companies – – 2,031 1,497Other current receivables 16 29,320 19,675 29,003 19,460Prepaid costs and accrued income 17 12,242 2,816 11,358 2,612350,209 51,715 342,726 43,935Cash and bank 18 318,656 83,052 310,061 79,313Total current assets 832,735 225,605 812,052 208,195TOTAL ASSETS 945,057 309,449 924,596 294,328Tax on profit for the year 7 -18,990 20,037 -16,619 20,24244 / Profit and loss accountsNet profit/loss for the year 71,054 -53,306 75,278 -51,279Balance sheet / 45

Balance sheetCash flow statementsNotes Group Parent companyTSEK 31 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999Notes Group Parent companyTSEK 31 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999EQUITY AND LIABILITIESEquityRestricted equity 19Share capital 19,101 14,001 19,101 14,001Share premium reserve 533,473 70,404 537,069 74,000Restricted reserves/legal reserve 27,297 28,758 2,400 2,400579,870 113,163 558,570 90,401Non-restricted equity 19Non-restricted reserves/retained earnings 28,604 81,510 24,199 75,478Net profit/loss for the year 71,054 -53,306 75,278 -51,27999,657 28,204 99,478 24,199Total equity 679,527 141,366 658,047 114,600Untaxed reserves 20 0 0 33,627 34,205Provisions 21 10,116 23,477 0 13,499OperationsProfit/loss after financial items 90,043 -73,343 91,319 -73,260Adjustments for items not included in cash flow:Dispositions 35 11 35 11Certain provisions and accrued costs 18,667 22,473 18,667 22,518Change in translation difference, equity 1) -1,257 1,236 0 0Depreciation 15,903 8,999 14,012 8,642123,390 -40,623 124,033 -42,088Income tax paid 2) -2,183 -967 0 0Cash flow from operations before changein working capital 121,207 -41,590 124,033 -42,088Change in working capitalIncrease(-) /decrease(+) in inventories -73,031 -30,654 -74,318 -28,979Increase(-) /decrease(+) in current receivables 3) -294,871 -27,118 -295,168 -21,544Increase(+) /decrease(-) in accounts payable 34,741 8,798 34,462 6,989Increase(+) /decrease(-) in other current liabilities 40,686 32,088 33,298 25,04446 / Balance sheetLong-term liabilities 22Liabilities to credit institutions 49,778 48,777 45,187 46,431Other liabilities 5,000 2,785 5,000 2,785Total long-term liabilities 54,778 51,562 50,187 49,216Current liabilitiesLiabilities to credit institutions 11,592 7,616 1,244 1,244Advance payments from customers 16,790 19,062 16,790 19,062Accounts payable 57,564 22,823 55,258 20,796Liabilities to group companies – – 1,781 –Income tax liability 1,970 1,022 – –Other current liabilities 6,030 3,350 3,855 2,541Accrued costs and deferred income 23 106,690 39,171 103,807 39,166Total current liabilities 200,636 93,044 182,734 82,808TOTAL EQUITY AND LIABILITIES 945,057 309,449 924,596 294,328Memorandum itemsPledged assets 24 81,415 78,036 75,000 75,000Contingent liabilities 25 4,371 2,261 None NoneCash flow from operations -171,268 -58,476 -177,693 -60,578Capital expenditureAcquisitions of tangible fixed assets 8,9,10,11 -63,840 -11,347 -56,811 -7,590Acquisitions of financial fixed assets 12 – – -6,751 –Sale of equipment -35 – -35 –Increase (-) /decrease (+) in long-term receivables -784 -987 2,897 –Cash flow from capital expenditure -64,659 -12,333 -60,700 -7,590FinancingNew share issue (IPO) 472,500 – 472,500 –Issue expenses -35,531 -3 -35,531 -3New share issue (warrants) 31,200 – 31,200 –Cumulative effect deferred taxes prevoius years 196 – – –Increase(+)/decrease(-) in certain provisions -50 378Increase(+)/decrease(-) in long-term liabilities 3,216 3,886 972 1,540Net cash flow from financing 471,531 4,261 469,141 1,537Increase/Decrease in liquid funds 235,604 -66,548 230,748 -66,631Opening liquid funds 83,052 149,599 79,313 145,944CLOSING LIQUID FUNDS 318,656 83,052 310,061 79,3131) Change in translation difference, equity has an effect on cash flow from current operations.The figures form 1995 have been adjusted to a corresponding extent.2) Income tax paid refers to current tax on taxable profits.The figures for 1999 have been adjusted accordingly.3) During January 1–15, 2001 accounts receivable have been settled amounting to TSEK 186,000.Cash flow statements / 47

Accounting principles48 / Accounting principlesThe annual report is made up inaccordance with the recommendationsissued by the Swedish AccountingStandards Board.Principles of consolidationThe consolidated financial statementsare made up using the purchasemethod and include all subsidiaries.Translation of financial statementsof foreign subsidiariesThe foreign subsidiary is consideredas independent foreign business andhas been translated using the currentmethod. Assets and liabilities aretranslated at closing date exchangerates, while revenue and expense aretranslated at approximate transactiondate rates. Any translation differencesthat arise are taken directly toequity.The long-term foreign subsidiaryreceivables have been valuedat the rate of exchange at the timethe receivables arise. The translationdifference for these receivables hasbeen taken directly to restrictedequity in the consolidated balancesheets.Accumulated currency differencesstated direct against equityamounted to TSEK 2,674 at thebeginning of the year, and to TSEK1,417 at the end. The decrease islargely attributable to the settlementof long-term claims on subsidiarycompanies and their replacement bynew claims during the year.Tangible assetsProperty, machinery, and equipmentare stated at acquisition cost afterdeducting accumulated depreciation.The tangible assets are depreciatedon a straight-line basis based on theirestimated economic life. The followingdepreciation rates have beenused: buildings 3 percent, machineryand equipment 20 percent, and computerequipment 33 percent.LeasingLeased assets refer in part to financialleasing and in part to operationalleasing. The former asset is stated inthe consolidated balance sheet as afixed asset and is depreciated inaccordance with the principles forfixed assets in general. Future leasingfees are reported as liabilities. Theleasing fee, following deductions forinterest, reduces the stated liability.Currency managementThe parent company’s currency exposureis controlled by hedging currencyflows by means of forward contractsin the relevant currencies. Thecompany’s hedging policy requiresthe net flow in foreign currency andorders booked to be hedged on a continualbasis.The balance sheet items subjectto currency hedging are Accountsreceivable, Cash and bank, andLiabilities to suppliers. At the closingdate, the net flow relating tothese items was hedged in accordancewith the above policy bymeans of forward contracts withoutstanding duration of up to twomonths.Receivables and liabilities inforeign currencies are valued at closingdate rates and/or hedging rates,except for the parent company’slong-term claims on foreign subsidiaries,which are valued at the ratesprevailing when the claims arose.The difference between hedgingrates and daily rates in connectionwith the extension of forward contractsis periodized over the durationof the contract. The net effect of periodizedhedging premiums is statedunder Interest revenue and similaritems.Currency differences on operatingreceivables and liabilities are statednet within operating income underOther operating revenue or Otheroperating expense. Currency differenceson long-term receivables of afinancial character that have beensettled are included within incomeafter financial net, the net amountbeing stated under Interest revenueand similar items.The effect of currency differenceson income after financial netfor the financial year was to lower theresult by TSEK 13,608 (last year1,467). The hedging measures takenenabled the company to cover itselfagainst currency fluctuations duringthe fall at lower exchange rates thanactual rates. Closing deferred currencylosses amounted to TSEK 3,946which will be realised during thefirst quarter of 2001.InventoriesInventories are valued at the lower ofacquisition value or actual value.Semi-manufactured and finishedproducts have been valued at directmanufacturing cost, including a reasonableamount of indirect costs.ReceivablesReceivables, after individual valuation,have been taken at the amountwhich it is expected will be paid.Reporting of taxActual tax refers to the tax which iscalculated on the basis of the taxableprofit for the year. Deferred tax refersto the tax which is calculated partlyon the basis of taxable temporary differencesand partly on tax-relateddeficit. Actual tax involves an immediatepayment consequence unlikedeferred tax.Group: Deferred tax liabilities/taxclaims are calculated on the basis ofuntaxed reserves, inter-group profitin stocks, exchange rate profits andlong-term receivables (foreign subsidiary)and are stated underProvisions in the consolidated balancesheets. Deferred tax expense/taxrevenue are calculated on the basis ofchanges in untaxed reserves, intergroupprofit in stocks and are statedunder Tax on profit for the year inthe Profit and loss accounts.Parent company: Deferred tax liabilitiesare stated as a part of untaxedreserves (i.e. only as a footnote to thebalance-sheet item). Deferred taxexpenses are calculated on the basisof changes in untaxed reserves andare stated only as a footnote to theProfit and loss accounts. Deferred taxclaims and deferred tax revenue arecalculated on the basis of that part ofthe year’s tax-related deficit which isexpected to be used against futuretaxable surplus. The receivable istreated either as long and/or shortterm, depending on when in thefuture the dificit is expected to beutilised, i.e. stated under eitherOther long-term receivables orOther current receivables in the balancesheet. Tax claim is stated asprofit for the year in the Profit andloss statement.Research and DevelopmentResearch and development costs arecharged as they arise.PensionsPension undertakings are generallyeffected through the payment ofinsurance premiums.Income recognitionThe income recognition of deliveredsystems is made in full on delivery, atwhich time estimated outstandingcosts are taken into account.Payment for service agreements isinvoiced in advance and is given aduration equal to that of the agreement.Accounting principles / 49

Notes of the accountsAll amounts in the notes below are in TSEK, except where otherwise stated.Note 1 Net salesGroupParent company2000 1999 2000 1999Europe 1,706 3,276 1,513 2,410USA 159,543 18,952 151,883 18,952Asia 543,093 191,185 511,851 175,341Salaries and other remunerationBoard and president 1) 13,047 10,765 10,272 10,765thereof Japan (–) (–) (–) (–)thereof USA (2,775) (–) (–) (–)Other employees 112,597 69,712 98,172 62,735thereof Japan (13,795) (6,977) (–) (–)thereof USA (628) (–) (–) (–)128,419 80,477 108,444 73,500Total 704,342 213,413 665,247 196,7031)of which bonus 6,360 97 5,770 97Parent Company Inter-company transactions2 (2) percent of the year´s purchases have been from Micronic Japan K.K and Micronic Laser Systems, Inc. 1 (3) percentof the year´s sale have been to Micronic Japan K.K and Micronic Laser Systems, Inc.Note 2 Other external costsGroupParent company2000 1999 2000 1999Auditing fees and other fees:Auditing assignments 517 574 434 454Other assignments 1,347 795 1,237 795Statutory and contractual social security and other contributionsPension insurance premiums –Board and President 445 4,003 416 4,003thereof Japan (–) (–) (–) (–)thereof USA (29) (–) (–) (–)Pension insurance premiums – other employees 6,217 6,271 5,731 5,663thereof Japan (398) (608) (–) (–)thereof USA (88) (–) (–) (–)Other statutory social security contributions 32,703 22,729 31,635 22,037thereof Japan (1,068) (692) (–) (–)thereof USA (–) (–) (–) (–)“Audit assignments” includes the auditing of the financial statements, the accounts, the administration of the Board ofDirectors and president and other such duties that befall the company’s auditors, and advice or other assistance resultingfrom observation made during the audit or from the carrying out of all other such duties. Everything else is considered“Other assignments”. Other assignments include the examination of accounts, etc in connection with the flotation of thecompany in 2000.Note 3 Personnel costsGroupParent company2000 1999 2000 1999Average number of employeesWomen 45 26 41 25thereof Japan (2) (1) (–) (–)thereof USA (2) (–) (–) (–)Men 195 140 167 124thereof Japan (19) (16) (–) (–)thereof USA (9) (–) (–) (–)39,364 33,003 37,782 31,703Board of directorsThe approved fee for 2000 amounts to TSEK 525. No fees are paid to the boards of subsidiary companies.PresidentBert Jeppsson was appointed president in 1999. Compensation for the departing president, Staffan Junel, was charged infull against income for 1999.Bert Jeppsson is contractually bound to retire as president on March, 13, 2001. In connection with the flotation ofthe company, a bonus of TSEK 4,275 was credited to Bert Jeppsson. This amount, plus social security costs therewithrelated, has been taken direct against equity under "Other issue costs" in accordance with generally accepted practice.This bonus will be disbursed together with Jeppsson´s salary payment in March 2001. No other compensation, over andabove this, will be paid in connection with Bert Jeppsson´s retirement as president.Sven Löfquist will become president on March 13, 2001. His contract of employment runs with six months´mutual notice of termination. Under certain circumstances, Löfquist will become entitled to 24 months´ severance pay.Löfquist is entitled to monthly compensation amounting to TSEK 188, in the form of salary and/or the payment of anoccupational pension premium to an insurance company, at his own discretion.There are no pension commitments in respect of the Board and president.50 / Notes of the accountsTotal 240 166 208 149Other management personnelFor the company´s CFO, CTO and VP Marketing, severance pay is related to the period of employment, subject toa maximum of 18 months´ salary. Under certain circumstances these individuals are entitled to severance pay of18 months´ salary in their event of their own resignation.Notes of the accounts / 51

Note 4 Items affecting comparabilityNote 8 Land and buildingsGroupParent companyGroupParent company2000 1999 2000 199931 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999Severance pay and pension for president – 12,318 – 12,318Provision for legal costs – 10,200 – 10,200Note 5 Dividend from group companies0 22,518 0 22,518GroupParent company2000 1999 2000 1999Dividend from group companies – – 800 1 500BuildingsOpening balance acquisition value 38,873 36,995 38,873 36,995Purchases 7,000 1,878 7,000 1,878Closing balance accumulated acquisition value 45,873 38,873 45,873 38,873Opening balance depreciation -2,840 -1,730 -2,840 -1,730Depreciation for the year -1,242 -1,110 -1,242 -1,110Closing balance accumulated depreciation -4,082 -2,840 -4,082 -2,840Note 6 Interest income and similar itemsGroupParent company2000 1999 2000 1999Residual value according to plan 41,791 36,033 41,791 36,033LandOpening balance acquisition value 8,781 8,781 8,781 8,781Purchases – – – –Interest income 11,207 3,231 11,068 3,210Interest income group companies – – 242 –Currency losses – financial -1,762 – -1,762 –Closing book value 8,781 8,781 8,781 8,781Residual value according to plan 50,572 44,814 50,572 44,814Note 7 Tax on profit for the year9,445 3,231 9,549 3,210GroupParent company2000 1999 2000 1999Tax assessment valuesBuildings 20,800 15,800 20,800 15,800Land 4,949 4,399 4,949 4,39925,749 20,199 25,749 20,199Current tax expense on profit before tax 27,912 967 25,731 –Current tax revenue/expense on non-deductible/non-taxable items etc. -25,895 – -25,731 –Deferred tax expense taxable loss for last year 20,242 – 20,242 –Deferred tax revenue on taxable loss for the year -3,623 -20,242 -3,623 -20,042Deferred tax revenue on changes in untaxed reserves -162 -487 – –Deferred tax revenue on changes in inter-group profit in inventories -252 -275 – –Deferred tax expense on temporary differencies etc. 769 – – –18,990 -20,037 16,619 -20,042Deferred tax revenue on changes in untaxed reserves – – -162 487Note 9 MachineryGroupParent company31 dec 2000 31 dec 1999 31 dec 2000 31 dec 1999Opening balance acquisition value 684 684 684 684Purchases – – – –Closing balance accumulated acquisition value 684 684 684 684Opening balance depreciation -427 -309 -427 -309Depreciation for the year -96 -118 -96 -118Closing balance accumulated depreciation -523 -427 -523 -427Residual value according to plan 161 257 161 25752 / Notes of the accountsNotes of the accounts / 53

Note 10 EquipmentNote 11 Construction in progressGroupParent company31 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999GroupParent company31 dec 2000 31 dec 1999 31 dec 2000 31 dec 1999Opening balance acquisition value 35,700 26,264 31,943 26,264Purchases 30,155 9,469 23,129 5,712Acquisition value, sold and retired equipment -127 -33 -127 -33Closing balance accumulated acquisition value 65,728 35,700 54,945 31,943Opening balance depreciation -18,435 -10,685 -18,078 -10,685Depreciation sold equipment 51 21 51 21Depreciation for the year -14,563 -7,771 -12,674 -7,414Closing balance accumulated depreciation -32,947 -18,435 -30,701 -18,078Residual value according to plan 32,781 17,264 24,244 13,865Leasing agreements and similarEquipment made available on financial leasing terms:Opening balance acquisition value 3,312 0 0 0Purchases for the year as above 30,155 9,469 – –Less: Purchase non-leased equipment -25,444 -6,157 – –Acquisition value of financially leased equipment 8,023 3,312 0 0Opening balance depreciation -276 0 0 0Depreciation for the year as above -14,563 -7,771 – –Less: Depreciation non-leased equipment 13,231 7,495 – –Accumulated depreciation of financially leased equipment -1,608 -276 – –Residual value according to plan 6,415 3,036 0 0Costs for the year for financial leasing – – 1,885 297Equipment made available on operational leasing terms:Acquisition value 4,795 1,578 4,374 1,578Of which newly signed contract (net for the year) 3,217 275 2,796 275Costs for the year for operational leasing including office space rent 5,606 393 1,744 393Opening balance acquisition value 0 – – –Purchases 26,759 – 26,759 –Closing balance acquisition value 26,759 0 26,759 0Note 12 Shares in group companiesParent company31 dec 2000 31 dec 1999Opening balance acquisition value 762 762New share issue 2,362 –New establishment 4,390 –Closing balance acqusition value 7,514 762Company No. of % BookCorp.id.no. domicile shares holding valueMicronic Treasury AB 556501-0989 Täby 1,000 100 100Micronic Japan K.K. Tokyo 200 100 3,024Micronic Laser Systems Inc. Wilmington 500 100 4,390Note 13 Receivables from group companies7,514Parent company31 dec 2000 31 dec 1999Opening book value 6,192 6,192Additions 3,215 –Deductions -6,192 –Closing book value 3,215 6,19254 / Notes of the accountsFuture payment commitments concerning financial andoperational leasing and other leasing agreements: 1)Within one year 3,417 1,275 2,888 1,130Between one and five years 2,769 191 5,959 2,537After five years – – – –1) Commitments concerning financial leasing have not been included for the group, as these have been stated as liabilities.Notes of the accounts / 55

Note 14 Other long-term receivablesNote 17 Prepaid costs and accrued incomeGroupParent company31 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999GroupParent company31 dec 2000 31 dec 1999 31 dec 2000 31 dec 1999Opening book value 20,508 279 20,242 0Additions 1,784 20,242 80 20,242Deductions -20,242 -13 -20,242 –Closing book value 2,050 20,508 80 20,242Deferred tax receivables are included with 204 20,242 – 20,242and are based onthe parent company loss for the year – -71,521 – -71,521non-deductible/non-taxable income items, etc,Group/parent company -486 -772 – -772Note 15 InventoriesGroupParent company31 dec 2000 31 dec 1999 31 dec 2000 31 dec 1999Components 86,885 27,571 86,885 27,571Spare parts 10,018 11,092 5,413 5,200Work in progress 66,967 52,176 66,967 52,176Total 163,870 90,839 159,265 84,947Note 16 Other receivablesGroupParent company31 dec 2000 31 dec 1999 31 dec 2000 31 dec 1999Amount of current tax claim included 2,021 9,991 2,021 9,991Amount of deferred tax claim included 3,778 – 3,623 –Deferred tax claim is calculated on the basis of:Profit before tax for the year, parent company 91,897 – 91,897 –Loss brought forward, parent company -72,293 – -72,293 –non-deductible/non-taxable income items, etc,Group/parent company -32,911 – -32,544 –Prepaid exchange rate loss future rate agreement 3,946 – 3,946 –Prepaid commissions 2,810 491 2,810 491Accrued interest income 704 78 681 78Prepaid insurance premiums 424 446 424 446Accrued service income – 864 – 864Other 4,358 937 3,497 733Note 18 Cash and bank12,242 2,816 11,358 2,612GroupParent company31 dec 2000 31 dec 1999 31 dec 2000 31 dec 1999Unutilised bank overdraft facility 10,000 27,685 10,000 25,000Note 19 EquityThe share capital consists of 19,100,583 shares of a par value of SEK 1. All shares are of the same class and each sharecarries one vote.Share Share premium Restricted Non-restrictedcapital reserve reserve equity TotalParent companyOpening balance 14,001 74,000 2,400 24,199 114,600New share issue (IPO) 4,500 468,000 472,500Issue expenses -35,531 -35,531New share issue (warrants) 600 30,600 31,200Net profit for the year 75,278 75,278Closing balance 19,101 537,069 2,400 99,477 658,04756 / Notes of the accountsNotes of the accounts / 57

cont. Note 19 EquityShare Share premium Restricted Non-restrictedcapital reserve reserve equity TotalNote 21 ProvisionsGroupParent company31 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999GroupOpening balance 14,001 70,404 28,758 28,204 141,366New share issue (IPO) 4,500 468,000 472,500Issue expenses -35,531 -35,531New share issue (warrants) 600 30,600 31,200Transfer from restricted to non-restricted reserves -416 416 0Currency differences -1,045 -212 -1,257Cumulative effect deferred taxes prevoius years 196 196Net profit for the year 71,054 71,054Closing balance 19,101 533,473 27,297 99,657 679,527Note 20 Untaxed reservesTax allocation reservesParent company31 Dec 2000 31 Dec 1999Year of assessment1996 3,286 3,2861997 11,430 11,4301998 10,891 10,8911999 8,020 8,020Total transfer to tax allocation reserves 33,627 33,627Depreciation in excess of planMachinery – 15Equipment – 563Total depreciation in excess of plan 0 578Sum total untaxed reserves 33,627 34,205Deferred tax on untaxed reserves 9,416 9,577Pension provisionsPension to retiring president – 3,299 – 3,299Pension commitments in group companies 725 338 – –Total pension provisions 725 3,637 0 3,299Tax provisionsDeferred tax on untaxed reserves 9,416 9,577 – –Deferred tax on inter-group profit in inventories -788 -535 – –Deferred tax on exchange rate profits -6 599 – –Deferred tax on temporary differencies etc. 769 – – –Total tax provisions 9,391 9,641 0 0Other provisionsProvisions for legal costs 1) – 10,200 – 10,200Total other provisions 0 10,200 0 10,200Sum total provisions 10,116 23,477 0 13,4991)In the previous year, a provision for legal costs was stated among Provisions, as it was considered certain or probable that the item would be incurred, but that the amount wasuncertain, as was the date it would be incurred.This year´s provision is stated among "Accrued expense and prepaid revenue" in Note 23 below.Note 22 Long-term liabilitiesGroupParent company31 dec 2000 31 dec 1999 31 dec 2000 31 dec 1999Closing balance 66,370 59,178 51,431 50,460Of which is stated as current liabilities -11,592 -7,616 -1,244 -1,244Due between one and five years 10,900 10,103 6,309 7,757Due after five years 43,878 41,459 43,878 41,459Total long-term liabilities 54,778 51,562 50,187 49,216Other liabilities refer in total to a conditional loan from NUTEK. Repayment will only be made if the project for whichthe loan has been granted, succeeds. The loan from NUTEK remains interest free until that time when repayment commences.The result of the project is expected between 2001–2004, in the third quarter of 2001 at the earliest.58 / Notes of the accountsNotes of the accounts / 59

Note 23 Accrued costs and deferred incomeKoncernenModerbolaget31 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999Accrued salaries incl. social security contributions 41,504 25,075 40,406 25,075Accrued installation and guarantee costs 39,337 8,390 39,337 8,390Accrued commissions 9,754 491 9,754 491Accrued legal costs 1) 4,274 – 4,274 –Other 11,821 5,215 10,036 5,210Täby, Sweden, February 1, 2001Christer Zetterberg Nils Björk Millert CarlssonChairmanMagnus Ryde Hans Fletcher Bert JeppssonPresident106,690 39,171 103,807 39,1661) The provision for legal costs is stated among "Accrued expense and prepaid revenue", since the amount and the date when it will be incurred are no longer uncertain. Cf.Note 21 above.Our audit report was submitted on February 1, 2001Note 24 Pledged assetsGroupParent company31 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999Collateral provided for stated liability itemson balance sheet is shown below:Liabilities to credit institutionsProperty mortgages 46,000 46,000 46,000 46,000Lien on equipment owned on financial leasing contracts 6,415 3,036 0 0Unutilised bank overdraft facilityFloating charges 29,000 29,000 29,000 29,00081,415 78,036 75,000 75,000Anders ÖstbergAuthorized public accountantLindebergs Grant Thornton ABBjörn StensonAuthorized public accountantLindebergs Grant Thornton ABNote 25 Contingent liabilitiesGroupParent company31 Dec 2000 31 Dec 1999 31 Dec 2000 31 Dec 1999Repurchase undertaking for sold customer invoices 4,371 2,261 – –60 / Notes of the accountsNotes of the accounts / 61

Auditors’ reportTo the general meeting of the shareholdersof Micronic Laser SystemsAB (publ.) Corporate identity number556351-2374.We have audited the annualaccounts, the consolidated accounts,the accounting records and theadministration of the board of directorsand the managing director ofMicronic Laser Systems AB (publ.)for the year 2000. These accountsand the administration of the companyare the responsibility of the boardof directors and the managing director.Our responsibility is to expressan opinion on the annual accounts,the consolidated accounts and theadministration based on our audit.We conducted our audit inaccordance with generally acceptedauditing standards in Sweden.Those standards require that we planand perform the audit to obtain reasonableassurance that the annualaccounts and the consolidated accountsare free of material misstatement.An audit includes examining, on atest basis, evidence supporting theamounts and disclosures in theaccounts. An audit also includesassessing the accounting principlesused and their application by theboard of directors and the managingdirector, as well as evaluating theoverall presentation of informationin the annual accounts and the consolidatedaccounts. As a basis for ouropinion concerning discharge fromliability, we examined significantdecisions, actions taken and circumstancesof the company in order to beable to determine the liability, if any,to the company of any board memberor the managing director. We alsoexamined whether any board memberor the managing director has, inany other way, acted in contraventionof the Companies Act, the AnnualAccounts Act or the Articles ofAssociation. We believe that ouraudit provides a reasonable basis forour opinion set out below.The annual accounts and the consolidatedaccounts have been preparedin accordance with the AnnualAccounts Act and, thereby, give atrue and fair view of the company’sand the group’s financial positionand results of operations in accordancewith generally acceptedaccounting principles in Sweden.We recommend to the generalmeeting of shareholders that theincome statements and balancesheets of the parent company and thegroup be adopted, that the profit forthe parent company be dealt with inaccordance with the proposal in theadministration report and that themembers of the board of directorsand the managing director be dischargedfrom liability for the financialyear.Stockholm, SwedenFebruary 1, 2001More and more computers are being fitted with flat-paneldisplays (LCD’s). In 2000, just over 6.3 million of these displayswere sold, while in 2001, sales are expected to soarto around 12.3 million.The manufacture of eachflat-panel display requires 5–7 photomasks.Source: Display Search, December 2000.Anders ÖstbergAuktoriserad revisor(Authorised Public Accountant)Lindebergs Grant Thornton ABBjörn StensonAuktoriserad revisor(Authorised Public Accountant)Lindebergs Grant Thornton AB62 / Auditors’ report

Executive ManagementBert JeppssonPresident and CEO. Born 1939.Employed since 1999. Doctor’sdegree from the Royal Institute ofTechnology. Executive Developmentprogram at IMEDE. Previous positions:Research at Cornell Universityand Microwave Institute. Senior VicePresident of Ericsson and Presidentof Ericsson Components. Shareholdingin Micronic: 1,180. Holding ofoptions: 212,500.Hans BuhreChief Technology Officer. Born 1944.Employed since 1986. Master’s degreein physics. Shareholding in Micronic:113,850.Sven LöfquistExecutive Vice President Born 1956.Employed since 1985. Master’s degreein electronic engineering. Shareholdingin Micronic: 132,500.Carl DuringVP Core Development. Born 1960.Employed since 1997. Ph.D inMecatronics. Associated professor inMecatronics at KTH since 1998.Shareholding in Micronic: 280.Holding of warrants: 7,500.Jorge FreyerPresident of Micronic USA and VPMarketing. Born 1950. Employedsince 1999. Master’s degree in Engineering.Shareholding in Micronic:25,000. Holding of warrants: 35,000.Ulf SundströmVP Sales and Customer Support.Born 1958. Employed since 1996.Master’s degree in EngineeringPhysics. Shareholding in Micronic:12,333. Holding of warrants: 19,250.Jonas ModéerVP Production and Installation.Born 1947. Employed since 1997.Master’s degree in Physics. Shareholdingin Micronic: 1,800. Holdingof warrants: 11,000.Thomas WarringerCFO & VP. Finance & Administration.Born 1953. Employed since1998. Bachelor of Business Administrationand IEP of INSEAD.Shareholding in Micronic: 12,500.Holding of warrants: 9,500.Torbjörn SandströmVP Strategic Development. Born1952. Employed since 1991. Ph.Din Solid State Electronics. Shareholdingin Micronic: 61,880. Holdingof warrants: 11,500.Johan ÅmanVP System & Application Development.Born 1968. Employed since1996. Master’s degree in EngineeringPhysics. Shareholding in Micronic:1,083. Holding of warrants: 12,250.Holdings include shares, options andwarrants held by closely affiliated companiesand family members.From bottom right; Bert Jeppsson, Sven Löfquist,Thomas Warringer,Jorge Freyer, Hans Buhre, Carl During, Jonas Modéer, Ulf Sundström,Torbjörn Sandström och Johan Åman.Excutive Management / 65

Board and auditorsBoardChrister ZetterbergBorn 1941. Chairman. Chairmansince 1998. Chairman of the Board:IDI AB (Industrial Development andInvestment), Segerström och SvenssonAB and TurnIT AB. Member of theBoard: L E Lundbergföretagen ABand Holmen. Vice chairman of IVA(Royal Academy of EngineeringSciences). Shareholding in Micronic:10 000. Holding of options: 25,000Nils BjörkBorn 1928. Director since 1989.President of Micronic from 1989 to1996. Member of IVA. Shareholdingin Micronic: 562,000.Millert CarlssonBorn 1945. Director since 1989.Member of the Board: OlmedOrtopediska AB, Spectrogon AB andSecus Data AB. Shareholding inMicronic: 142,500.Hans FletcherBorn 1937. Director since 1996.Member of the Board: Atle IndustriAB, Elektronik-gruppen BK AB andseveral small companies. Shareholdingin Micronic: 7,500. Holding ofoptions: 12,500.Bert JeppssonBorn 1939. President and CEO ofMicronic. Director since 1998.Doctor’s degree from the RoyalInstitute of Technology Executive.Development program at IMEDE.Previous positions: Research atCornell University and MicrowaveInstitute. Senior Vice President ofEricsson and President of EricssonComponents. Shareholding inMicronic: 1,180. Holding of options:212,500.Magnus RydeBorn 1956. Director since 1999.Chairman of the board: FlexICs, Inc.,Member of the board: Effnet AB,Equipnet Ltd. Shareholding inMicronic: 25,000. Holding of options:25,000.Magnus EhrenstråhleBorn 1948. Deputy Director since1999. Vice President SwedishIndustrial Development Fund. Shareholdingin Micronic: 200.Sven LöfquistBorn 1956. Deputy Director since1998. Executive Vice President ofMicronic. Shareholding in Micronic:132,500.AuditorsAnders ÖstbergBorn 1943. Micronic’s auditor since1989. Authorized public accountant,Lindebergs Grant Thornton AB.Björn Stenson.Born 1940. Micronic’s auditor since1998. Authorized public accountant,Lindebergs Grant Thornton AB.Holdings include shares, options andwarrants held by closely affiliated companiesand family members.66 / Board and auditorsFrom left; Hans Fletcher, Magnus Ehrenstråhle, Nils Björk,Bert Jeppsson, Sven Löfquist, Christer Zetterberg ochMillert Carlsson. Magnus Ryde is missing on the photo.

GlossaryThe stage of the Omega pattern generators is made ofZerodur, a glass ceramic material with an extremely lowtemperature coefficient. Even small variations in temperaturecould otherwise lead to errors in pattern placement on thephotomask.The pattern placement tolerances are verysmall, typically a few 10’s of nanometers.Acousto-opticsA method where the direction oflight passing through a crystal ischanged using a high frequencysound wave.AODAn AOD (Acousto-Optic Deflector)is used to create a sweep of the exposurelaser beams in the Micronic laserpattern generators.AOMAn AOM (Acousto-Optic Modulator)is used to control the intensity ofthe exposure laser in the Micronicpattern generators.CADCAD (Computer Aided Design) datathat describes the patterns writtenon Micronic’s pattern generators.The data is created using software forthe design of electronic circuits.Common data formats created withthe CAD software are DXF, Gerber,GDS II.Cathod Ray Tube (CRT)The traditional picture tube for TV:sand computer monitors.DUVDUV (Deep Ultra Violet) Light withvery short wavelength used in semiconductormicrolithography. Themost common wavelengths are 248nm and 193 nm due to good availabilityof lasers. A shorter wavelengthgives better resolution.FPDFPD (Flat Panel Display). Differenttypes of FPDs are used for e. g.screens in laptop computers, mobiletelephones and “TV on the wall”.ICIntegrated Circuit (IC) is a termreferring to all electronic componentscontaining more than one circuitelement on the same electronicchip, e.g. memories, processors andamplifiers.InterferometerAn interferometer uses the wavelengthin laser light as an extremelyhigh precision ruler.LCDLCD (Liquid Crystal Display)Displays based on liquid crystaltechnology. The two technologies arepassive and active LCD.PhotomaskCan be described as a photo negative.The image on the negative is writtenwith Micronic’s pattern generator. Inthe production of the end product,e.g. IC or FPD, the image on thephotomask is transferred to the substratevia a photographic process.There are two types of microlithographicphotomasks: standard photoemulsion on glass and chrome onglass. The photosensitive material onthe chrome photomask is a layer ofphotoresist covering the chromelayer. Photoresist is a light sensitivematerial with properties such that itcan be washed away after exposure.PDPPDP (Plasma Display Panel) A typeof flat panel display that can bemanufactured very large (40-70inches diagonally) and relatively thin(ca 100 mm).ReticleA reticle is in this context a semiconductorphotomask which onlycontains a part of the semiconductorwafer. The word comes from theearly practice in micro-lithographyto put a picture element in the reticleplane in a microscope eye pieceand use the microscope as a microlithographicexposure device. A semiconductorreticle typically containsthe pattern of a few semiconductordevices.The reticle is used in step andrepeat exposure systems called wafersteppers.Glossary / 69

The precision requirements for a pattern generator are extreme.On each photomask there is a pattern that can contain severalbillion features.They must all have the right shape, size and positionwithin 10–30 nm.To achieve this precision the system must becalibrated very accurately. One of the fundamental requirementsis that the laser beam is correctly aligned in the optical path.Resist, PhotoresistThe light sensitive material used inthe manufacture of photomasks.Resist is also used in the next step inthe production where the pattern onthe photomasks is projected on asubstrate*. So called i-line resist is acommon type used for 365 nm exposurewavelength.Shadow maskCentral component in all color televisionscreens and computer monitors.The shadow mask is a thinmetal plate covered with very smallholes that define the pixels in aCRT*. It is mounted inside thescreen close to the front glass.Without the shadow mask it is notpossible to project a color image onthe screen.SLMThe SLM (Spatial Light Modulator)technology uses an array of individuallycontrolled micro mirrors on asilicon chip. A small part of the patternto be exposed is programmedinto the chip and transferred to thephotomask with a flash from a laser.The technology is reflective and canbe used with short wavelengths thatare absorbed by transmissive optics.Another advantage is that the SLMexposes a large part of the patternin one flash, a million pixels, whichincreases the throughput.SubstrateThe material on which the imagefrom the photomask is projected inthe lithographic process. The materialcan be glass, metal or silicon; alight sensitive layer of photoresist orphoto emulsion is deposited onto thesurface, which enables exposure.TFT-LCDTFT-LCD, an active LCD providingbetter image quality and fasterrespons than a passive LCD. Theactive LCDs have a Thin FilmTransistor (TFT) in each pixel.70 / GlossaryProduction: Ehrenstråhle & CoIllustrations: Mikael EricssonPhotographer:Paul Allan, page 2, 6, 10, 18, 22, 67, 68, 71.Viktor Brott, Global Reporting, page 36.Östen Mattsson, page 32.Lennart Ström, page 64.Print: A.T.T. Grafiska

Micronic Laser Systems AB (publ.)Nytorpsvägen 9Box 3141,183 03 Täby, SverigeTel: 08 638 52 00Fax: 08 638 52 90E-mail: info@micronic.sewww.micronic.seMicronic Strategic DevelopmentStena Center. Holtermansgatan 1B412 92 Göteborg, SverigeTel: 031 772 81 00Fax: 031 82 90 79Micronic Laser Systems Inc.1804 N. Shoreline Blvd.Suite# 210Mountain View, CA 94043, USATel: +1 650 962 8400Fax: +1 650 962 9400Micronic Japan K.K.Masumoto Building 3F7-4-3, Nishishinjuku, Shinjuku-ku,Tokyo 160-0023, JapanTel: +81 3 3227 8218Fax: +81 3 3227 8217Micronic TaiwanRM# 606, No 1, Industry East Road 2Science-Based Industrial ParkHsin-Chu,TaiwanTel: +886 3 564 6656Fax: +886 3 564 6664