AIXTRON: Increased earnings and profits ...

!!! Press Release !!!

AIXTRON: Increased earnings and profits ...

In Q4 1997, the AIXTRON group - AIXTRON AG, along with Atlanta-based AIXTRON Inc. of the US - reported total revenues of DM29.0 million, accounting for more than one-third of revenues for the whole of 1997. For the 12 months, AIXTRON earned revenues of DM77.8 million - an increase of around 63 per cent over the previous year's DM47.6 million. The positive growth trend of the last few years continues and AIXTRON´s forecast for 1997 has been greatly exceeded.

AIXTRON posted a pre-tax of DM9.3 million, resulting in net profits of DM4.4 million for the year - 33 per cent up on the previous year. Results were affected by extraordinary expenses to the sum of DM4.1 million related to the company's IPO. AIXTRON operating and financing income stood at DM13.4 million, an increase of 89 per cent on 1996. The consolidated earnings according to DVFA of DM6.4 million correspond to earnings per share according to DVFA of DM2.55. This exceeds the DM2.35 estimated for 1997 by 8.5 per cent. A key factor behind this positive development is AIXTRON´s highly efficient cost structure, due primarily to the high level of outsourcing of parts which are not part of AIXTRON´s core technology. This policy has enabled the company to reduce its personnel costs as a portion of total output from 18.6 per cent in 1996 to 16.6 per cent in 1997. The number of employees also increased rising by 40 in the course of the year to 145. An additional factor was the favorable exchange rate with the US dollar which had a positive effect on revenues and earnings.

The firm's most important market in the past year was North America, accounting for 44 per cent (DM34 million) of AIXTRON's total revenues, followed by Asia with 37 per cent (DM28.9 million) and Europe, with 19 per cent (DM14.9 million). Growth rates on the American continent are also impressive, reaching 89 per cent last year compared to revenues of DM18 million in 1996. This growth is made all the more exceptional by the fact that the USA is the domestic market of AIXTRON´s most important competitor. Among customers who received or accepted equipment for shipment in Q4 were Hewlett-Packard, TECSTAR and NORTEL (North America), Thomson and Siemens (Europe) as well as several Asian research institutes. In order to further extend its global leadership, AIXTRON once again concluded publicly sponsored research agreements with well-known international partners in Q4: The ADMIRAL project commenced on 1 November, comprising AIXTRON, Epichem Ltd. of the UK, the University of Aachen, the University of Montpellier and the Czech Academy of Sciences in Prague. The objective of this venture is to develop sensors based on infrared lasers for use in medicine and environmental technology. Total expenditure/investment on Research and Development in 1997 was exactly as planned, amounting to 9,8% of total revenues.

... a strong balance sheet ...

Prior to its IPO, AIXTRON AG increased the subscribed capital from retained earnings from DM4.2 million to DM10 million. Capital was further increased by DM2.5 million to a total of DM12.5 million as part of the IPO. This increase led to a paid-in surplus of DM47.5 million. The group equity ratio increased from 22.6 per cent to 63.8 per cent. The increase in current assets from DM34.9 million to DM90.7 million is due to two factors: advances received from customers and the above paid-in surplus account for a high cash position; in addition, AIXTRON increased its inventory levels in order to further improve its service to customers. The increase in work-in-progress from DM6.5 million to DM9.4 million is explained by the very high order backlog at year-end 1997.

... a high order backlog ...

The value of new contracts signed in Q4 totaled DM23.2 million. The Asian market's 39 per cent share of these contracts was just as forecast by AIXTRON. Growth in this region continues unabated. At end-Q4, the value of contracts accounted for more than DM60 million - around 27 per cent higher than at the end of the same period in 1996. The financially threatened countries of Indonesia, Malaysia, Singapore, Thailand, the Philippines and Hong Kong are not markets for AIXTRON and were therefore not included in revenue forecasts. The Executive Board therefore expects that the forecast figures for 1998 will be exceeded.

... and excellent service

In order to be able to deliver spare parts and service as quickly as possible, AIXTRON has established service centers and spare-parts storage facilities in the most important markets. In Q4, the task of equipping these storage sites was completed. AIXTRON representatives and storage facilities can be found in China (Beijing), Japan (Tokyo), Korea (Seoul), Taiwan (Hsin-Chu) and USA (Chicago). AIXTRON opened a second American support center on 1 October, 1997 in Los Angeles. This was established to further improve service to numerous customers on the West Coast - concentrated in the LA region and around San Jose.

Group balance sheet according to HGB - in '000 DM -
	1997	1996
	I. - IV. Q.	I. - IV. Q.
	Prel.	ACT.
Assets
Fixed assets	10,699	10,589
Current assets
Inventories	15,851	9,459
Accounts receivable	9,622	8,258
Cash and cash equivalents	65,219	17,216
Prepaid expenses	200	69
Liabilities & shareholders´ equity
Shareholders´equity
Subscribed capital	12,500	4,200
Capital surplus	47,500	1,000
free reserves	2,932	1,200
Consolidated retained earnings	1,792	3,907
f/x variation	61	18
Accruals	6,709	7,591
Liabilities
To banks	0	4,208
Advances received	23,662	19,327
Accounts payable	5,202	3,588
Other liabilities	1,233	552
Deferred income	0	0
Balance sheet total	101,591	45,591

Group income statement according to HGB - in '000 DM -
	1997	1996
	I. - IV. Q.	I. - IV. Q.
	Prel.	ACT.
Revenues	77,792	47,589
Increase in work-in-progress	2,954	2,401
Other operating income	1,924	569
Total output	82,670	50,559
Cost of materials	42,564	25,215
Personnel costs	13,710	9,427
Depreciation	1,275	1,015
Other operating expenses	12,251	8,000
Operating income	12,870	6,902
Financing income	496	160
Operating and financing income	13,366	7,062
IPO expenses	4,103	---
Net income before taxes	9,263	7,062
Taxes on income	4,784	3,669
Other taxes	72	76
Consolidated earnings	4,407	3,317
DVFA/SG group profit	6,364	3,317

Statement of cash flows - in '000 DM -
	1997
	Prel.
Consolidated earnings	4,407
Depreciation on non-current assets	1,275
Increase in long-term accruals	534
Cash Flow according to DVFA/SG	6,216
Changes in short-term accruals	-1,416
Increase in inventories	-6,392
Increase in accounts receivable and other current assets	-1,364
Changes in prepaid expenses	-132
Changes in short-term liabilities (excluding liabilities to banks)	6,006
Effect of exchange rate changes	-36
Cash flows used for(-)/from operating activities	2,882
Purchase of tangible fixed assets	-1,380
Sales of tangible fixed assets	1
Effect of exchange rate changes on fixed assets	-6
Cash flows used for(-)/from investing activities	-1,385
Capital increases	50,000
Issue of convertible bonds	625
Decrease in liabilities to banks	-4,208
Cash flows used used for(-)/ from financing activities	46,417
Changes in cash and cash equivalents	47,914
Effect of exchange rate changes on cash	89
Cash and cash equivalents at beginning of year	17,216
Cash and cash equivalents at end of year	65,219

Key data
	1997	1996
	I. - IV. Q.	I. - IV. Q.
	Prel.	ACT.
Cash flow (DVFA/SG) per share in DM	2.49
Consolidated earnings (DVFA/SG) per share	2.55
Increase in revenues	63.4%	72.0%
Increase in profit (DVFA/SG)	93.9%	49.0%
Return on sales (DVFA/SG)	8.2%	7.0%
Return on equity (DVFA/SG)	9.8%	32.1%
Equity ratio	63.8%	22.6%

For further information please contact:

Sarah Fairweather
Marketing Manager
AIXTRON AG
Kackertstr. 15 - 17
52072 Aachen
Germany
Tel: +49 (241) 8909-473
Fax: +49 (241) 8909-40

email: sf@aixtron.com
www: http://www.aixtron.com