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Archive 2005 (04/21/05) First quarter 2005: Unaxis records increase in orders received (comparable basis1) of 17 percent versus weak previous quarter – Favorable developments in core business areas of thin film and vacuum technology – Key elements for independence of Semiconductor Equipment put in place – Display Technology to focus on solar activities

Pfäffikon SZ, April 21, 2005 - As compared to the weak previous quarter, Unaxis registered a 6 percent increase in orders received to CHF 330 million or, as it were, on a comparable basis1 by 17 percent to CHF 364 million (Q4 2004: CHF 313 million). Sales declined slightly on a quarter-over-quarter basis by 3 percent to CHF 338 million (Q4 2004: CHF 347 million). Vacuum Solutions, Data Storage Solutions, and Components and Special Systems segments managed in a difficult market environment to record a double-digit increase in orders received.

19 percent increase in orders received by thin film and vacuum technology segments

The activities of Unaxis’ thin film and vacuum technology businesses, comprised of its Coating Services (Balzers), Vacuum Solutions (Leybold Vacuum), Data Storage Solutions, and Components and Special Systems (Optics and Space Technology) segments, witnessed a 19 percent increase to CHF 280 million (Q4 2004: CHF 235 million) in orders received during the first quarter of 2005. Due to the previous quarter’s low level of orders received, sales declined by 17 percent to CHF 253 million (Q4 2004: CHF 305 million).

In comparison to the unusual business-related strength seen in the fourth quarter of 2004, sales at Coating Services (Balzers) declined modestly by 5 percent to CHF 91 million (Q4 2004: CHF 96 million) but still confirmed the segment’s continuing favorable course of business. The geographic expansion of its market presence continued in the first quarter of 2005 with the opening of two coating centers in California, USA and Argentina. Six additional centers are currently under construction. The newly introduced product application Balinit Alcrona was well received by customers.

Vacuum Solutions (Leybold Vacuum) in the first quarter of 2005 enjoyed a 12 percent quarter-over-quarter increase to CHF 97 million in orders received (Q4 2004: CHF 87 million) and a 7 percent rise in sales to CHF 94 million (Q4 2004: CHF 88 million). With the goal of achieving a return on sales of significantly more than 10 percent by the end of 2007, the segment’s new management initiated a comprehensive restructuring project. Unaxis will report in the near future on the planned measures and their impact.

Following the low level of the previous quarter, orders received by Data Storage Solutions rose by 59 percent to CHF 28 million (Q4 2004: CHF 18 million). Due to the weak flow of orders received during previous months, sales for the first quarter of 2005 declined to CHF 19 million (Q4 2004: CHF 30 million). However, DVD RW systems continued to generate a gratifying level of sales.

Thanks in particular to Space Technology, Components and Special Systems can look back on a fine first quarter of 2005. As compared to the previous quarter, orders received by the segment rose 87 percent to CHF 64 million (Q4 2004: CHF 34 million). Sales declined by 47 percent to CHF 48 million (Q4 2004: CHF 91 million) in reflection of the slow pace of orders booked during the final quarter of 2004. Space Technology received a significant order from Arianespace to supply the payload fairing for the new Ariane 5 launch vehicle.

Due to the favorable development of the company’s thin film and vacuum technology business areas, Unaxis is going on the assumption that the low points in the respective markets have been passed. Moreover, the rising amount of orders received confirms the competitiveness of Unaxis’ technologies and products.

Independence for Semiconductor Equipment pursued further

The Semiconductor Equipment segment, consisting of Wafer Processing and Assembly & Packaging (ESEC), recorded a first-quarter 2005 increase of 46 percent in orders received to a total of CHF 81 million (Q4 2004: CHF 57 million). Sales declined by 31 percent to CHF 58 million (Q4 2004: CHF 85 million). The segment’s Wafer Processing and Assembly & Packaging divisions are being merged to create an independent organizational entity. Going forward, the newly formed Semiconductor Equipment segment, headquartered in Cham, Switzerland, will comprise five business units: Etch, PVD, CVD, Wire Bonding, and Die Attach.

As a result of its streamlined, integrated structure, this new organizational arrangement will contribute to a further improvement in the profitability of Semiconductor Equipment’s business activities. It also takes into account the imminent move towards the integration of front- and back-end technologies to create “systems in a package“. In addition, the realigned organization puts in place the key elements for the planned independence of the Semiconductor Equipment segment.

Exit from unprofitable flat panel display business and expansion of solar activities

Unaxis is withdrawing from the market for flat panel displays. As previously announced, the Display Technology division is in the process of being restructured within the framework of the adopted plan. The completion of customer projects currently underway as well as the professional maintenance of all installed systems will be accomplished by a service and support unit based mainly in Taiwan.

The newly constituted Solar division will concentrate on the growing business for solar technology and be developed into a leading provider of process technologies and manufacturing systems for the mass production of large-surface solar modules based on thin film silicon technology. As a result of exclusive rights to use key patents, as well as its know-how in the field of industrial process technologies, Unaxis is in a position to enable the cost-effective mass production of efficient, large-surface solar modules. Discussions are underway for the sale of the display activities.

Outlook for the 2005 financial year

The thin film and vacuum technology markets, which represent the future foundation of Unaxis, should continue their favorable development in 2005 despite cyclical fluctuations at Data Storage Solutions and Optics. The further growth and improved profitability of these business activities is to be fostered through geographic expansion, increased organic growth, and the opening up of new areas of application.

For the Semiconductor Equipment segment, Unaxis is continuing to reckon with a low degree of visibility as to market conditions. The ongoing build-up of production capacity for Assembly & Packaging in Asia is being aggressively pursued and will lead to the improved competitiveness of this division. By having organizationally merged its frontand back-end business activities, Unaxis is convinced that the pieces have been put in place for the segment’s consistently profitable development.

This media release is based on information currently available to management. The forward-looking statements contained herein could be substantially impacted by risks and influences that are not foreseeable at present, so that actual results may vary materially from those anticipated, expected, or projected.

Attachment: Key figures tables

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