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Aixtron's restructuring costs contribute to Q1 loss

Depressed revenues and restructuring charges caused Aixtron to record a net loss of €4.4 million in the first quarter of 2003.
MOCVD equipment maker Aixtron reported consolidated revenues of €18.7 million ($21.2 million) for the first quarter of 2003. This represents a drop of 60% compared to the €47.2 million reported for the same period in 2002. The Q1 2003 figures were in line with projections.

Almost two-thirds (65%) of the company s revenues came from Asia, while North America accounted for 28% of revenues and Europe for 7%.

Aixtron recorded a loss before tax of €6.7 million in the first quarter of 2003, compared with an income of €12.3 million in the year-ago period. The net loss after tax was €4.4 million, or €0.70 per share, compared with a net income of €7.3 million, or €0.11 per share, in 2002.

A major factor contributing to the reported losses was that all of Aixtron s restructuring expenses were brought forward into the first quarter, due to workforce reduction settlements that occurred sooner than previously expected. Also, R&D expenses were accelerated to €3.4 million, compared with €2.4 million in the first quarter of 2002, following further progress in OVPD and Tricent technology developments.

The company’s Executive Board expects it to return to profitability in the second half of 2003 as a result of proportionally higher revenues in the remaining reporting periods as well as the positive impact of the cost-saving measures.

The ongoing geopolitical events and the related general investment nervousness continue to influence customer purchasing behaviour. New system orders amounted to €15.2 million in the quarter (2002: €25.0 million). Customers placing orders included Epistar, Arima and Epitech in Taiwan; SAIT in South Korea; and Fangda Group in China.

The COPH/IOFFE (Russia), Hong Kong University (China) and Rensselear Polytechnic Institute (USA) research institutes also placed orders in Q1. Order backlog at the end of QI totaled €88.2 million (2002: 118.2 million).

Paul Hyland, Aixtron’s CEO, said that the company had been able to finalize its restructuring measures in the first quarter, allowing it to fully concentrate on customer and technology development programs.

"The recent results we have achieved with our new technology platforms, such as the Tricent system for manufacturing key materials for future generations of IT chips and OVPD technology for use in OLED displays, are very encouraging," said Hyland. "This progress makes us all the more confident that we will be able to generate growth from these new and substantially larger markets in the years to come, in addition to our existing business in MOCVD technology for compound semiconductors."

Outlook

Aixtron s estimates that its revenues for the whole of 2003 will reach €110 million ($125 million), down around 27% compared with €150.7 million in 2002. Net income is expected to be €0.8 million, compared to €15.3 million in 2002.

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