Micronic

ANNUAL REPORT 2009

OPERATIONS

Highlights of 2009
Comments by the CEO
The share
Strategic focus
Business area Pattern Generators
Business area SMT equipment
Employees, environment and quality
Corporate governance report
Board of directors and auditor
Executive management
Financial overview
Other information

Flap Financial and technical glossary

FINANCIAL REPORTS

Reports of the directors
Risks and risk management
Consolidated profit and loss account
Statement of comprehensive income
Comments on the consolidated profit and loss account
Comments on the statement of financial position and cash flow
Consolidated statement of cash
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated Pro forma accounts
Parent Company profit and loss account
Parent Company cash flow statement
Parent Company balance sheet
Comments on the Parent Company profit and loss account and balance sheet
Parent Company statement of changes in equity
Additional information and notes
Audit report

For further information and explanations, please see glossaries in the back of the annual report or visit the web sites www.micronic.se and www.mydata.com.

THE MICRONIC GROUP IN BRIEF

The Micronic Group is active in the electronics industry in two business areas: Pattern Generators (PG) and Surface Mount Technology equipment (SMT). Business area PG operates under the Micronic Laser Systems brand while business area SMT operates under the MYDATA brand. Micronic acquired MYDATA in 2009.

Business area PG originates from microlithography research at the Royal Institute of Technology in Stockholm. Today the business area develops, manufactures and markets a series of extremely accurate, laser-based pattern generators used in the production of photomasks. The photomasks produced are used by the world's leading electronics companies in the manufacture of TV and computer displays, the production of

semiconductor chips and for advanced electronic packaging.

Business area SMT, which develops, manufactures and markets advanced surface mount equipment for flexible production of electronics, has more than 20 years' experience in the electronics industry. Surface mount technology is used for surface mounting of electronic components and stencil-free jet printing of solder paste on Printed Circuit Boards (PCB).

The head office of the Micronic Group is located in Täby outside Stockholm, which in the first quarter of 2010 will also become home to SMT operations. The Group currently has subsidiaries in China, France, Germany, Japan, the Netherlands, Singapore, South Korea, Taiwan,

the UK and the US. At year-end the Group had 581 employees.

BUSINESS AREA PATTERN GENERATORS

Business area PG serves a manufacturing industry that operates round the clock and requires high-quality products at the cutting edge of technology. The business area has about ten major customers around the world. The majority, around 80 percent, are based in Asia. The customers can be divided into two categories. The first is commercial "merchant" mask shops, which supply electronics manufacturers. Examples of these include Toppan, DNP and Hoya. The second is major electronics manufacturers with captive mask shops, such as Intel, Samsung and LG.

MICRONIC ANNUAL REPORT 2009

FUNDAMENTAL MARKET DRIVERS FOR THE GROUP

Globally increasing demand for electronic products
Increasingly compact mobile electronics
Increased utilization of displays
Short product life cycles
Cost-effective production

MARKET POSITION

The business area is a market leader in pattern generators for displays. The systems have become the industry standard. Their competitive advantages are its strong technological lead, high writing accuracy and superior productivity.

In the semiconductor market the business area is an established supplier that offers the market pattern generators for cost-effective volume production of photomasks for both leading edge semiconductor devices and volume production of simpler IC designs.

Advanced electronic packaging is a part of the semiconductor market where the business area has a leading position. Electronic packaging is used to connect and protect semiconductor chips.

Write speed and high quality are the business area's key competitive advantages in this market.

The business area also sees a future market for a new product in advanced electronic packaging, Laser Direct Imaging (LDI).

BUSINESS AREA SMT

The business area serves the market for surface mount technology, where electronics with a relatively high added value are produced. Here guiding principles such as high quality, short set-up times and flexibility are crucial. The business area has more than 3,500 machines installed at 1,900 sites worldwide. Most of its customers are in the US and Europe. The customer structure consists of many small to mid-sized customers primarily in

industries with short product series and relatively expensive and complex PCBs. They are dependent on flexible equipment that enables rapid shifts in production. The customers include contract manufactures in the electronics industry as well as manufacturers of own brand products in the aerospace, aircraft, computer and telecom industries, which require a high degree of flexibility in electronics production.

MARKET POSITION

The business area has a market-leading position in flexible electronics production that is based on a combination of high quality, innovative production technology and high flexibility.

MICRONIC ANNUAL REPORT 2009

HIGHLIGHTS OF 2009

Micronic Laser Systems AB acquired MYDATA automation AB through a non-cash issue to MYDATA's shareholders. Hereby a new business area, SMT equipment, was added.
Net sales for the new Group were SEK 829 million.
The company posted an operating loss of SEK –146 million.
The operating loss adjusted for capitalization and amortization of development costs was SEK –83 million.
The order intake was SEK 631 million.
The gross margin was 40 percent.
Micronic received an order for a Prevision-8 system from an Asian display maker.
Peter Uddfors took up his post as President and CEO on November 23, 2009.

ORDER INTAKE

NET SALES AND OPERATING MARGIN

SHARE OF NET SALES 2009 PRO FORMA BY APPLICATION

NET SALES 2009 PRO FORMA BY GEOGRAPHICAL MARKET

FINANCIAL OVERVIEW	2009	2008	2007	2006	2005	2004
Net sales, SEK million	829	569	523	1,204	1,276	839
Gross margin %	39.5	28.4	29.3	54.3	54.4	55.8
Operating profits/loss, SEK million	-146	-37	-291	123	172	126
Operating margin %	-17.6	-6.6	-55.6	10.2	13.5	15.0
Adjusted operating margin, %	-10.1	-15.0	-40.2	18.2	22.3	5.2
Order intake, SEK million	631	378	634	604	1,306	945
Order backlog, December 31, SEK million	42	224	332	200	871	794
Earnings per share, before dilution, SEK	-2.21	-0.78	-5.30	2.37	3.00	2.77
Earnings per share, after dilution, SEK	-2.21	-0.78	-5.30	2.37	2.99	2.7
Average number of employees	613	398	416	462	415	359

MICRONIC ANNUAL REPORT 2009

COMMENTS BY THE CEO

The new Micronic Group, which is the result of the merger between MYDATA automation and Micronic Laser Systems in July 2009, can now report its first year-end results. The merger took place in a challenging economic environment, but with our structured integration phase and strategy for long-term profitability and growth, I am confident about the future.

On November 23, 2009, I took up my post as the Group's CEO. What brought me to Micronic is the company's world-leading position, the unique industry-leading expertise of our staff and the big potential of the new group. Few companies in Sweden have leading expertise in such technologically advanced fields as Micronic. By investing aggressively in research and development, the company has outpaced its competitors in the global market in several areas.

The new Micronic is formed by two businesses that are being merged, which means that the company is doubling its volume of business. The Group operates in the markets for surface mount technologies, displays and semiconductors. Micronic's business area Surface Mount Technology (SMT) offers surface mount products under the MYDATA brand while the business area Pattern Generators (PG) offers products for pattern generation on photomasks under the Micronic Laser Systems brand.

PREPARING FOR THE FUTURE

The strategic rationale behind the acquisition of MYDATA is that the two businesses are similar, creating a potential for synergies. The development departments will be integrated, as both use similar development models and some aspects of the technical solutions are similar. The new, merged development department will have a greater critical mass and will be able to implement projects more effectively and in less time. Through the merger the Group will achieve a more even capacity utilization and be able to consolidate purchases into larger volumes and thus obtain lower prices. The fixed costs can be spread over a larger operation, leading to improved competitiveness. In sales and services we take a cautious and realistic view of the synergies that can be achieved. Selling and providing services for our products are specialized activities that require a high degree of expertise. Finally, the merger will result in a more balanced revenue model, helping to release tied-up capital.

The integration of MYDATA and Micronic Laser Systems will be implemented based on a 100-day plan. In spring 2010 operations in Bromma will be relocated to Täby and functions for development, production, administration, IT and accounting will be integrated. We expect the total synergies and savings to exceed SEK 60 million. The full effect of these will be felt in 2011. The costs of the merger were fully charged to expense in 2009.

As part of the merger a new management team has been appointed and all executive positions have been reviewed. We now have a management that is consistent with our new strategy, where the focus is on:

Developing our leading positions in flexible surface mounting and pattern generators.
Continuing to develop an effective and profitable service business.
Investing aggressively in developing new technological solutions and products that contribute to our future growth and profitability.

Another key task for the management team will be to draw up new long-term financial targets for the Group.

STRATEGIC FOCUS

To ensure long-term profitability and growth, it is necessary to continuously invest in technological development. The level of technological sophistication and the dynamics of the market require aggressive and innovative solutions for today's and tomorrow's product offerings.

During 2009 we completed the generational shift from our previous pick & place machine series to our new MY100 series with the launch of two new models. We also introduced a new model of our MY500 jet printer for application of solder paste. The response from our customers has been very encouraging, and we succeeded in capturing market share in a falling market. MYDATA's MY500 jet printing technology has revolutionized and streamlined the production technology for application of solder paste, and we see a big potential in MY500. MYDATA's jet printing technology represents a technological breakthrough that can be used partly to increase in-house sales, and partly for licensed production. By leveraging the potential of jet printing technology while continuing to offer its existing pick & place technology, the business area will work to increase growth.

In the display market, Micronic Laser System's products are well positioned with products for the next generation of display production through Prevision-10. Moreover, we have a competitive offer for cost-

MICRONIC ANNUAL REPORT 2009

MICRONIC ANNUAL REPORT 2009
3

effective production in the semiconductor market.

Advanced electronic packaging is a part of the semiconductor market. Electronic packaging is used to connect and protect semiconductor chips. Currently traditional lithography with photomasks is used. However, consumer demand for advanced electronic products is driving the development of increasingly complex integrated circuits, which in turn require innovative production solutions on the packaging side. A new production technology for advanced electronic packaging is direct write, or Laser Direct Imaging, LDI, of integrated circuits on microcircuit boards, or substrates. The company believes LDI technology can competitively meet the industry's technological and market requirements, and estimates the annual market at more than USD 100 million. We are currently working with other leading companies on the development of LDI. We also continually review the pace of these development activities to ensure that we are able to meet the market requirements.

In 2010 we will continue to develop our service offering with a view to building it

into a profitable business for the Group. Our installed base is considerable, and our customers are dependent on machines that have a high availability and performance. This creates a need for services provided by qualified technicians.

NEW OPPORTUNITIES INSTILL CONFIDENCE IN THE FUTURE

We have received the first positive signals of an economic turnaround. However, there is a certain amount of uncertainty as to when our customers' capacity utilization will reach levels at which investments will rise. At the same time, the Group has unique products, world-leading expertise and employees who are creating new opportunities for the future. It is therefore with great satisfaction and confidence that I take on the task of leading Micronic.

Finally, I would like to thank all our customers and staff for the past year.

THE SHARE

The share is listed on NASDAQ OMX Stockholm, Small Cap. At December 31, 2009, the company had a market capitalization of SEK 933 million and the number of shareholders was 6,281.

OWNERSHIP STRUCTURE AT DECEMBER 31, 2009

GEOGRAPHICAL SPREAD OF OWNERSHIP AT DECEMBER 31, 2009

SHARE PRICE TREND

The closing price of the Micronic share (last price paid) rose from SEK 5.80 to SEK 14.30 at year-end 2009, an increase of 147 percent. Over the same period, the OMX Stockholm PI Index rose by 47 percent and the Philadelphia Semiconductor Index SOX by 70 percent.

The year's highest bid price was quoted at SEK 15.80 on August 5 and the lowest at SEK 5.50 on January 21.

Micronic's market capitalization at the end of 2009 was SEK 933 million, compared to SEK 227 million at year-end 2008.

SHARE DATA AND TRADING

The Micronic share, which is listed on NASDAQ OMX Nordic Exchange Stockholm, has the ticker symbol MICR. Around lot consists of 100 shares. All shares grant equal voting rights and equal entitlement to the company's capital and profits. A total of 55.3 million (17.0) Micronic shares were traded in 2009 for a total value of SEK 620 million (368). The turnover rate, calculated on the average number of shares, was 106 percent. The average daily trading volume was 220,302 shares (67,279), equal to an average daily value of SEK 2.5 million (1.5).

NON CASH ISSUE

On July 2, 2009, Micronic acquired MYDATA automation AB through a non-cash issue to MYDATA's former principal shareholder Skanditek Industriförvaltning AB. Micronic's share capital has increased by 26,111,057 shares to a total of 65,277,673 shares.

OWNERSHIP STRUCTURE

The number of shareholders at the end of 2009 was 6,281 (5,657). The ownership structure has changed during the year. Since July 2, 2009, Skanditek is the largest shareholder with 38 percent of the shares. At year-end 2009 the 10 largest shareholders held 56.8 percent (59.7) of the total number of shares. The 100 largest shareholders represented 70.7 percent (77.6) of the total number of shares.

At year-end 2009, 15 percent (18) of the shares were held by Swedish private investors, while 59 percent (63) were held by Swedish equity funds and institutions. Foreign investors held 26 percent (19). The Board of Directors and executive management controlled a combined 0.02 percent (0.1) of the number of shares and votes.

The 2009 Annual General Meeting was held in Täby on April 1 and 44 percent of the shareholders were represented at the meeting.

EMPLOYEE STOCK OPTION PROGRAM

The 2007 Annual General Meeting resolved to approve an employee stock option program running from 2007 to 2012. Under the program Micronic may issue 1,540,000 warrants for subscription to shares, whereby

MICRONIC ANNUAL REPORT 2009

the maximum dilutive effect is 4 percent. The share capital may be increased by no more than SEK 1,540,000. The terms of the program have been drawn up in collaboration with the company's largest shareholders and have involved allocation to the employees in Sweden on three occasions, after the publication of the interim reports for the second, third and fourth quarters of

The strike price is equal to 115 percent of the average market value on the ten trading days following publication of the respective quarterly reports and amounts to SEK 57, 54 and SEK 34, respectively. The members of the executive management together hold 210,000 stock options. The terms of the program are also described in Note 14.

DIVIDEND POLICY

So far, Micronic has not paid dividends but has instead reinvested the generated profits primarily to finance ongoing development activities and thereby create growth for the company.

The board of directors and CEO propose that no dividend be paid for 2009.

SHARE DATA

Listing	NASDAQ OMX, Nordic Exchange
Industry classification	Small Cap, Information Technology
Sector	Electronic Equipment & Instruments
Ticker symbol	MICR
ISIN code	SE0000375115
Number of outstanding shares	65,277,673
Trading block	100 shares

OWNERSHIP STRUCTURE AT DECEMBER 31, 2009

Holding by size	No. of shareholders	No. of shares	%
1-500	3,444	712,642	1.1
501-1,000	1,164	1,038,290	1.6
1,001-5,000	1,192	3,020,044	4.6
5,001-10,000	216	1,699,934	2.6
10,001-50,000	174	3,919,184	6.0
50,001-100,000	22	1,583,361	2.4
100,001-	69	53,304,218	81.7
Total	6,281	65,277,673	100.0

MICRONIC'S TEN LARGEST SHAREHOLDERS AT DECEMBER 31, 2009

Shareholder	No. of shares	Holding, %
Skanditek Industriförvaltning AB	24,801,073	38.0
Fjärde AP-fonden	3,524,400	5.4
Swedbank Robur fonder	2,146,865	3.3
Pharos Invest	2,015,825	3.1
Länsförsäkringar fonder	905,513	1.4
Avanza Pension Försäkring AB	817,799	1.3
Stockpicker fonder	779,502	1.2
Skandia fonder	772,744	1.2
Fonds Voor Gemene Rekening Beroeps	664,775	1.0
DnB/Carlson fonder	662,044	1.0
The ten largest shareholders	37,090,540	56.8
Others	28,187,133	43.2
Total number of outstanding shares	65,277,673	100.0

ANALYSTS THAT CONTINUOUSLY MONITOR MICRONIC

Investment bank/Research company	Analyst
Carnegie	Daniel Djurberg
Handelsbanken Capital Markets	Fredrik Agardh
Ålandsbanken	Mikael Lasén
Nordea	Mats Bergström
Redeye	Greger Johansson
Swedbank	Håkan Wranne

MICRONIC ANNUAL REPORT 2009

STRATEGIC FOCUS

MERGER

On 2 July 2009, Micronic Laser Systems AB acquired MYDATA automation AB. Prior to the merger the companies had exchanged experiences and worked together on technological development projects.

Through the acquisition MYDATA became a part of the Micronic Group and formed the Surface Mount Technology equipment (SMT) business area. The operations of the existing Micronic Laser Systems formed the Pattern Generator (PG) business area. The Micronic Laser Systems and MYDATA brands will be retained for the respective products and markets.

BACKGROUND TO THE MERGER

Micronic Laser Systems is a leading player in the market for pattern generators for the display industry. The company's products are technologically highly advanced. The market is limited and most of the customers are based in Asia. Each purchase of a pattern generator represents a significant investment for the customer. For the business area PG

this results in an irregular order intake. Periods of high growth alternate with sharp slowdowns. It is expected that this trend will become increasingly pronounced in future and that the cycles will become more protracted. The pace of technological development is not expected to remain as high as before, which means that each machine may be used for a longer time. This can result in fluctuations both in sales and earnings, as revenues are unevenly distributed over time.

For the business area this will require constant flexibility and a readiness to adapt to changing market conditions. In addition to pattern generators for the display market the business area also operates in the semiconductor and electronic packaging markets. It also sees a future market for a new product in advanced electronic packaging, Laser Direct Imaging, LDI.

However, growth in the display and semiconductor markets is expected to be limited. A long-term goal has therefore been to grow in new business areas outside its existing markets.

MYDATA is a market leader in equipment for flexible electronics production for low- and medium-volume series. The customer base is global and the largest markets are Europe and the US. Business area SMT has a much larger number of business transactions than business area PG but the size of individual transactions is smaller. The customers are dependent on flexible systems that enable rapid shifts in production. Demand for surface mount technology is driven primarily by growing demands for cost-effective production and by technological advances, such as placement speed, component size and precision.

The business area's revolutionary jet printing technology offers the market a more efficient production process for application of solder paste. The jet printing technology can potentially be developed to address the needs of new markets, including the semiconductor and packaging industries.

THE MANUFACTURING PROCESS FLOW FOR ELECTRONICS

The Group's business areas are active in the electronics industry. The process for electronics manufacture encompasses the business area's markets in three process steps: active components, IC assembly and PCB assembly. Micronic Laser System's pattern generators are used for writing photomasks for active components such as processors, memories and displays. They are also used to write photomasks in the process step for

IC assembly, or in other words, the production step that encapsulates the semiconductor circuit so that it is protected and can be connected to other electronic components. This is called electronic packaging. Existing lithographic solutions in electronic packaging do not comply with future demands. This has opened the market for new innovative solutions such as Laser Direct Imaging (LDI), which is the business area's new

development project for direct write on microcircuit boards, so-called substrates, so as to meet the new demands of the market.

The next process step is PCB assembly. The MY500 jet printing system is used to apply solder paste on the PCB. The components are thereafter mounted on the PCB with pick & place machines.

MICRONIC ANNUAL REPORT 2009

SYNERGIES

The new group formed through the merger has the potential to develop into a major supplier to the electronics industry with a wider product range. The organizations will be integrated and coordinated to cut costs, expand the pool of talent and improve efficiency. Units such as purchasing and production, research and development, administration and finance will be merged.

In spring 2010, the business area SMT will move into the Group's premises in Täby to optimize use of the company's production facilities.

The goal is that all synergies should be visible within twelve months of the merger, which is being implemented according to a defined integration plan. These synergies are expected to improve financial stability. The merger will smooth out the irregular distribution of order flows, sales and profitability in business area PG. The product and customer base will become broader, which will also reduce financial risk.

MERGER CREATES NEW OPPORTUNITIES

Both business areas are suppliers to the electronics industry with product offerings which in certain segments are converging. Business area SMT has a strong position in Europe and the US. Business area PG's strong presence in Asia could pave the way for faster growth in Asia for SMT equipment.

With its advanced technology and experience in photomask pattern generation business area PG is in a strong position to develop volume products for direct writing in electronic packaging and eventually advanced PCBs.

Through its new jet printing product line, business area SMT can offer products for direct application of solder paste on PCBs, which is the next step in the value-added chain after direct writing. Business area SMT also has well established products in flexible surface mounting and strong expertise in volume production of complex production equipment. The combination of these two business areas creates a strong

platform for the development, production and marketing of production equipment in the value chain from semiconductor chips to finished PCBs.

In electronic packaging the increasing complexity of semiconductor chips is driving the need for new, innovative production solutions. Through the use of its established pattern generator technology as well as new development of key technologies, LDI products for cost-effective production of electronic components are developed. With its future LDI products, the Group's business areas will supplement each other in the production process for electronic products.

STRATEGIC FOCUS

The new Micronic is being formed through the merger of two businesses. In this process there is a lot to that should be kept, some things that should be discarded and interesting areas that should be developed.

THE GROUP'S GENERAL OPERATIONAL GOALS FOR 2010 ARE TO:

Develop its leading positions in the market for flexible surface mount technology and in the market for displays to ensure faster growth.
Create a stable and profitable service operation founded on services and add-on products for the after market.
Develop new technological solutions and products that will help to generate future revenues.

Both business areas have a large installed machine base. Business area PG has a well functioning service offering that was further developed in 2009 and that has accounted for a growing share of the business area's revenues over the years. Business area SMT's after market does not generate the same revenues, relatively speaking, and there is a potential to develop the offer. The company believes after market services can be developed in both business areas and that the installed base is large enough to support a stable and profitable business.

After market services will be developed based on the customer's need for improved efficiency, availability and service levels.

The total market for SMT equipment is expected to recover in 2010, albeit from a low level. The business area's jet printing technology, which is protected by patents, is a revolutionary way to apply solder paste on PCBs. This is a technological breakthrough that can be used partly to increase in-house sales, and partly for licensed production. The business area will help to increase the growth of Micronic by exploiting the potential of jet printing technology and continuing to offer machines with pick&place technology for surface mounting of components. The machines for pick & place and jet printing were upgraded in 2009 and have been very well received in the market, resulting in an increase in market share.

For the display market business area PG has products that are well positioned for the market's demands as well as a competitive offering for cost-effective volume production in the semiconductor market. How the market will develop is hard to predict. The LDI development project is aimed at directly writing patterns for advanced electronic packaging. With the LDI market forecast to be worth more than USD 100 million annually, the merger has placed Micronic in a stronger position to achieve continued success in the project. As the operations of the two business areas are now converging, there are mutual benefits in product development. When the LDI is launched, it is expected to significantly increase sales and earnings.

BUSINESS AREA PATTERN GENERATORS

Micronic's Pattern Generators (PG) business area operates under the Micronic Laser Systems brand. The business area is a market leader in laser pattern generators for the production of display photomasks, semiconductor chips and electronic packaging.

OPERATIONS

The business area PG supplies a manufacturing industry that requires innovative, high-quality products at the cutting edge of technology to ensure reliable production. A key priority is speed, to ensure that the business area is able to manage rapid changes in the market as well as customer demands for fast deliveries and service. The business area has about ten major customers around the world. The majority, 80 percent, are based in Asia. The customers can be divided into two categories. The first is commercial "merchant" mask shops, which supply electronics manufacturers. Examples of these include Toppan, DNP and Hoya. The second is major electronics manufacturers with captive mask shops, such as Intel, Samsung and LG. Pattern generators represent significant investments for the customer, which means that each sale involves a high degree of personal contact with the customer.

The business area's development, production and marketing are located in Täby outside Stockholm. A department for strategic development is located in Gothenburg. The company has subsidiaries in Japan, South Korea and the US, which, in addition to providing service and customer support, also work closely with Micronic Laser Systems on marketing, sales and installation. There is also a small subsidiary in Taiwan and a branch office in China. In these countries the company also operates via an agent. Japan is also home to the Asia Technical and Application Center (ATAC), which provides support to the entire Asian region.

NET SALES 2009 BY APPLICATION

NET SALES 2009 BY GEOGRAPHICAL MARKET

KEY FIGURES	2009	2008
Order intake, incl. service, SEK million	391	378
Net sales, SEK million	579	569
Operating profit/loss, SEK million	-99	-37
Operating margin, %	-17.1	-6.6
Investments, SEK million	6	83
Average number of employees	363	398

MICRONIC ANNUAL REPORT 2009

MICROLITHOGRAPHY IS THE LINK BETWEEN DESIGN AND MASS PRODUCTION

Pattern generators are used to write microscopic images onto photomasks which then function as templates for mass production of displays, integrated circuits and electronic packaging. The manufacturing process, called microlithography, is similar to the way in which photographs are reproduced with the help of a negative.

In order to manufacture electronic components such as displays, semiconductor chips or electronic packaging, the component design, a pattern, must first be created in a CAD system and then transferred onto a photomask blank.

The component design is written with a Micronic pattern generator onto a photomask, a glass or quartz substrate coated with a light sensitive material.
The photomask functions in the same way as a negative in the photographic process, and a template is produced. The size of both the pattern and photomask varies depending on the component to be manufactured. The more patterns that can be fit onto a photomask, the more cost-effective production is possible.

Left: Display photomask 1220 × 1400 mm.

Middle: Semiconductor photomask 6 × 6".

Right: Photomask for electronic packaging 500 × 600 mm.

Using an exposure system, the photomask can now be repeatedly copied, or stepped, onto the substrate to be manufactured: glass substrates for displays, silicon wafers for semiconductor chips, etc.

The electronic component is ready to be mounted in a TV, computer, cell phone, etc.

Left: Display panel in cross-section.

Middle: Semiconductor, for example a computer memory chip.

Right: The chip is packaged so that it can be connected to other electronic components.

MICRONIC ANNUAL REPORT 2009

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MICRONIC ANNUAL REPORT 2009

OPERATIONAL GOALS FOR PATTERN GENERATORS IN 2010

Consolidate our market-leading position in the display market and strengthen our position in the semiconductor market and in electronic packaging.
Develop LDI to meet the market's need for cost-effective production and to increase sales and profitability.

THE DISPLAY MARKET

Micronic Laser Systems is a market leader in pattern generators and measurement systems for flat panel displays (FPD). The systems, which are used by photomask manufacturers, are the industry standard.

Total sales in the display market during 2009 amounted to USD 90.4 billion, which can be compared to USD 106.2 billion in 2008. For 2010, the sales forecast is USD 95.4 billion (DisplaySearch, December 2009).

Today TFT-LCD is by far the dominant FPD technology, and it is expected to remain so for the foreseeable future. Among competing technologies, AMOLED is expected to capture market share while PDP is expected to lose market share (DisplaySearch, November 2009). TFT-LCD and AMOLED both require advanced pattern generators for photomask writing. While the total display area is expected to grow by 6–10 percent annually over the next five-year period sales are expected to grow by 0–5 percent annually, as the average selling price per unit area falls. TVs and PCs are expected to remain the two main applications (DisplaySearch, December 2009).

FLAT PANEL DISPLAYS – MARKET SHARE BY TECHNOLOGY

MARKET DRIVERS DISPLAY

The market is largely driven by pricing pressures at the consumer level, which puts pressure on manufacturers to lower their costs and improve efficiency. Thanks to continuous price cuts at the end-customer level flat screens have rapidly captured market share from CRT TVs, which are disappearing completely from the market. Lower prices are primarily a condition for increasing volumes in China, India and other emerging markets.

An effective way to cut costs for display panel makers is to shift the production of

DISPLAYS

DRIVING FORCES

Increasing volumes
Price pressure
Thinner
More energy effective
Higher frame rate

TECHNOLOGY TRENDS

Integration of electronics in panel
Production step reduction
Higher yield
Introduction of more cost-effective materials
More and faster transistors
Improved panel transmittance

EFFECT ON MICRONIC

Increasing photomask volumes
Shift towards more advanced photomasks
Shift towards larger photomasks
Cost pressure on photomasks

their existing products from older plants to modern, generation-7 (G7), G8 and G10 plants. Thanks to a more efficient production process, the production cost is often significantly lower. Other methods for cutting costs are to reduce the number of process steps in the plants and to replace expensive components with less expensive alternatives.

The trend towards thinner displays is driven by consumers but is in many ways positive also for the manufacturers. They can demand higher selling prices and cut their storage and transport costs.

A growing environmental awareness has also created a need for more energy-efficient displays. One consequence of this is that in a large share of today's displays the conventional fluorescent tubes have been replaced by light-emitting diodes (LED) as light source. The cost of materials for LEDs is currently slightly higher but their power consumption is significantly lower. As early as 2011 some 56 percent of all displays are expected to be lit by LEDs (DisplaySearch, November 2009). To reduce the number of LEDs required and thus also the cost of the materials, all manufacturers are seeking to improve the light transmittance of their displays. Currently only about 10 per cent of the light generated actually reaches the front of the display. LED lighting also makes it possible to further reduce the thickness of the display.

As moving images can still come across as blurred on a flat screen TV compared with a CRT TV, manufacturers are expected to offer screens with higher frame rates (more frames per second) in coming years. 100–120 Hz displays are already common and even higher frequencies are expected in future. The trend towards showing films in 3D is also creating a demand for higher frame rates.

Overall, the effect of these trends is that panel makers are increasingly demanding more advanced photomasks, which in turn creates a demand for more advanced pattern generators. The business area's Prevision product series is well positioned to meet these new demands.

MARKET OUTLOOK DISPLAY

The sharp increase in sales of flat panel displays in China led to announcements of a large number of planned investments in G7.5-G8.5 plants in China in 2009. The new plants are scheduled to begin production in 2011-2013. Near-term, a number of new plants are also being built in South Korea and Taiwan, and capacity is being increased at existing facilities. Total investments in production equipment are expected to reach USD 11.3 billion in 2010 and USD 10.1 billion in 2011 (DisplaySearch, January 2010). Among the business area's customers the growth in volumes is reflected in higher capacity utilization in installed pattern generators.

THE SEMICONDUCTOR MARKET

The global recession which began in the second half of 2008 had a big impact on the semiconductor industry also in 2009. However, a turnaround occurred in the second quarter of 2009, which is reflected both in rising sales for the largest companies (Prismark, November 2009) and higher capacity utilization among semiconductor makers (SICAS, Q3-09). Despite the recovery in the second half of the year, total semiconductor sales in 2009 fell by 8.6 percent compared with 2008, to USD 226 billion (VLSI Research, January 2010).

Micronic is an established supplier of laser pattern generators for the semiconductor market. Business area PG is mainly dependent on the markets for photomasks and production equipment. The trend towards more advanced nodes (45nm, 32nm) is positive for Micronic, as older established laser pattern generators are incapable of writing all capacity photomasks due to increasing requirements. Manufacturers instead have to use electron beam systems or Micronic's Sigma7500. Electron beam systems are used for the most critical layers in a photomask set, while the business area's Sigma7500 system can write the majority of layers much more cost-effectively. NuFlare and JEOL produce electron beam systems while Applied Materials continues to offer its existing laser pattern generators. The market for production equipment has largely mirrored the overall semiconductor

MICRONIC ANNUAL REPORT 2009

market, but with even bigger movements. In 2009 the market is expected to have decreased by 51 percent, to USD 15.7 billion, from USD 32.1 billion in 2008 (VLSI Research, January 2010).

MARKET DRIVERS SEMICONDUCTOR

Pricing pressures remain a strong driving force for the semiconductor industry. In its drive to cut the cost per unit the industry is developing smaller and smaller transistors. This makes it possible to mount more transistors on the same surface, cutting the cost per unit. However, this trend is adversely affected by accelerating investments in

new nodes, which means that only large companies with capacity for high-volume production can continue to invest in leading technology nodes.

Demand for more functionality is another driver behind the semiconductor industry. With smaller transistors, more functions can be squeezed into the same space, resulting in bigger memories and more powerful processors. At the end consumer stage the result is smarter phones, for instance.

Mobility is another strong driver. Mobility requires a wireless connection, which requires semiconductors. Mobile units also

need a long battery life, which leads to new demands and new design solutions and migration of designs to newer technology nodes with lower power consumption.

MARKET OUTLOOK SEMICONDUCTOR

The positive trend in the second half of 2009 is expected to continue, and in 2010 semiconductor sales are expected to reach USD 257 billion, an increase of 14 percent on 2009 (VLSI Research, January 2010). The capital equipment market is expected to grow by 57 percent, to USD 25 billion (VLSI Research, January 2010).

Micronic's Omega6000 product series

SEMICONDUCTORS

DRIVING FORCES

More functionality and higher performance
Price pressure
Mobile units

TECHNOLOGY TRENDS

Bigger memories
More powerful processors
Fast, wireless connection
Lower power consumption
Miniaturization
Large companies continue according to Moore's Law
Optimized production chain

EFFECT ON MICRONIC

More advanced photomasks
Moves designs and photomasks to more advanced nodes

MICRONIC ANNUAL REPORT 2009

Business area Pattern Generators

is affected by falling volumes in older technology nodes.

The Sigma7500 product series is well positioned for cost-effective volume production in today's and tomorrow's technology nodes.

THE ELECTRONIC PACKAGING MARKET

Currently, advanced electronic packaging is a two-stage process. The first stage, which is performed on the silicon wafer, is to prepare the chip for mounting on a microcircuit board, or substrate. Substrates are produced using traditional lithography in a process where a number of consecutive

pattern layers are transferred (copied) to the substrate. The photomasks used at this stage are currently produced using pattern generators such as Micronic Laser Systems' FPS5300 system. The business area has a leading position in this market.

The key parameters at the lithography stage are small structures, extremely precise conformity between the various layers and high-speed copying. Today's lithographic equipment struggles to meet all three requirements, which means that the market has been opened up to new, innovative solutions such as Laser Direct Imaging, LDI. The business area sees a market for LDI

products as a future production technology for advanced electronic packaging. The company's advanced technology and long experience with pattern generators for photomasks puts it in a strong position to develop an advanced, innovative LDI product for the substrate market. A partnership close to the leading players in the market is currently under way on LDI products, and the first products are expected to be evaluated by the market in 2010 at the earliest.

For that part of the electronic packaging market that uses photomasks the business area's FPS5300 pattern generator is well

ELECTRONIC PACKAGING

DRIVING FORCES

More functionality and higher performance
Price pressure
Mobile units

TECHNOLOGY TRENDS

More powerful processors
System-in-package
Fast, wireless connection
Lower power consumption
Miniaturization
Consumer electronics become cheaper and more available

EFFECT ON MICRONIC

Drives the number of in- and output signals, which demands higher performance in the lithography step
Drives the requirements (price, performance and cost) in the lithography step
Requires higher productivity in the manufacturing processes

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positioned to meet the industry's resolution and productivity requirements.

MARKET DRIVERS ELECTRONIC PACKAGING

The growing consumer demand for advanced electronic products, including mobile phones and computers, is driving the development of advanced electronic packaging. So far, mobile phones and computers have developed along parallel tracks but it now looks as if the two types of product are set to merge into "Mobile Internet Devices" (MID), bringing together the performance of the computer with the communications solutions of the mobile phone into a single, compact end product.

The growing complexity of semiconductor chips is driving a need for new, innovative production solutions on the packaging side to meet the industry's need for higher performance at a lower price. Higher performance is achieved through the ongoing process of miniaturization, where the size of structures is continually being reduced to match the trend in semiconductor chips, while lower costs are achieved by optimizing productivity in the manufacturing process.

MARKET OUTLOOK ELECTRONIC PACKAGING

The semiconductor market has continued to recover following the downturn in late 2008 and the first half of 2009 (Gartner 2009). The business area expects to see the same trend in electronic packaging and the advanced substrate segment of the semiconductor market is forecast to grow by 15 percent annually over the next few years (JMS 2009). Growth in the market is driving investments in production capacity, partly through the increase in substrate volumes and partly through a continuous migration of production volumes to more advanced generations, which require new production equipment for performance reasons. The business area estimates that the market for exposure equipment for substrate production will exceed USD 100 million annually.

AFTER MARKET

The after market is important and growing. Customers need to be able to use the production systems with a very high degree of availability to be efficient and meet demands for fast photomask supply. The after market consists of upgrades, add-on products, consulting services and, most importantly, service contracts. About 90 percent of the business area's installed base has service contracts, where the life cycle of a system is about 10 years. However, because of weak economic activity in 2009 some older systems were taken out of production, primarily in Japan and the US. To offset the shortfall in revenues, measures have been taken to cut costs in these regions.

The volume of service contracts remained fairly constant as old systems are replaced by more modern systems which enter the service phase when the warranty expires. Despite strong pressures to cut operating costs among customers, business opportunities exist in the form of add-on products and services. The market for these products is driven mainly by new panel designs and pressures to cut production costs.

A high service level is key for the business area's customers since Micronic Laser Systems' tools are mission critical for their business. The business area continuously drives to improve the support operations. A new model for efficient spare parts handling securing the right parts, in the right place, at the right time has been implemented. Investments have also been made to further increase the capability of field service engineers with extensive training programs.

These efforts and all the daily activities to serve customers by the entire team have resulted in a continued positive trend with increased system availability (uptime) for the installed base.

To further improve the service offering, the business area is developing new methods and functions to extend the proactive maintenance to meet the customer's need for even higher yield and production optimization.

PRODUCTS

The business area's product portfolio consists of pattern generators for photomasks in three areas: displays, semiconductors and electronic packaging. The business area also produces measurement systems for display photomasks. The photomasks

DISPLAY PRODUCTS
System	Application	Resolution/Generation
Prevision-10	TFT-LCD	0.75 μm/G11
Prevision-8	TFT-LCD	0.75 μm/G8
LRS15000-TFT3	TFT-LCD	0.75 μm/G8
LRS15000-TFT2	TFT-LCD	1.5 μm/G8
MMS15000	Registration measurement of display photomasks
SEMICONDUCTOR PRODUCTS
---	---	---
System	Application	Technology node
Sigma7500HA	Semiconductor	≥ 32–65 nanometer
Sigma7500HT	Semiconductor	≥ 90 nanometer
Omega6800	Semiconductor	≥ 130 nanometer
Omega6080	Semiconductor	≥ 250 nanometer
PRODUCTS FOR ELECTRONIC PACKAGING
---	---	---
System	Application	Msx. photomask size
FPS5300	Electronic packaging	1100 × 1100 mm

MICRONIC ANNUAL REPORT 2009

are used as templates for mass production of displays, semiconductor chips and electronic packaging.

The business area also offers add-on products such as new functions and/or improved performance as well as upgrades and consulting services.

RESEARCH AND DEVELOPMENT

Product development takes place in close partnership with the customer. The business Opportunity Pipeline is a process used to ensure that the business area focuses on developing the products and services that customers demand. In 2009 the business area's research and development activities centered on completion of the Prevision-10 system and on pre-development focused on LDI.

A factor of key importance for the business area is to protect its rights to new technology through patents and licensing agreements in application areas and markets that are deemed important for the future. At year-end 2009 Micronic's PG business area had 210 patents registered in the US, Asia and Europe, of which 38 were granted during the year.

PREXISION-10

The next generation of pattern generators for displays, Prevision-10, was completed in 2009. Prevision-10 is designed to meet the extreme demands placed on photomasks used in Generation 10 (G10) display production facilities. Prevision-10 represents a scaling-up of 50 per cent compared with Prevision-8. Over this larger surface area Prevision-10 is required to meet or exceed similar or stricter precision requirements on mura performance, placement accuracy and image quality as for photomasks for G8.

LDI

Pattern generators for direct writing, LDI, with a focus on substrate production require a new product architecture that differs significantly from pattern generators for photomasks. Pattern generators intended for photomask production have an extremely high accuracy (<100 nm) but also tolerate relatively long production times (>1 hour). LDI, on the other hand, is a medium-

precision technology (<1 micron) with extremely high productivity (<1 min). Despite this, the systems can share the most complex sub-systems. LDI is to a large extent based on technology developed for Micronic's Sigma7500 pattern generator and partly on Prevision-10 but is integrated into an entirely new architecture. The architecture as well as the critical sub-systems are based on the business area's own patents.

The two key sub-systems shared by LDI and pattern generators are:

SLM – for both Sigma and LDI the business area's SLM is the most critical component.
Datapath – LDI has acted as a driver behind a new datapath architecture with a superior price/performance ratio, which is transferrable to pattern generators.

In 2009 pre-development and feasibility studies on LDI for substrate production resulted in successful demonstrations for selected potential customers.

PRODUCTION

Pattern generators are produced at the business area's production facility in Täby. A pattern generator must be placed in a cleanroom during assembly of critical optics, calibration of sub-systems and testing of finished systems. In the next phase the installation department takes over responsibility for start-up, calibration and acceptance testing. Once a system has been approved it is delivered to the customer. Finally the system is installed at the customer's premises, where it is fine-tuned and final acceptance testing is performed.

OUTLOOK

In response to trends in the display industry, photomasks are growing increasingly complex to manufacture, which is expected to create the need for more advanced pattern generators. At the same time, competition between photomask makers has intensified, resulting in downward pressure on sales prices for photomasks. This price erosion has caused the majority of photomask makers to postpone invest-

ments in new and more advanced systems. However, growing volumes for G7-G8 and higher capacity utilization in already installed pattern generators indicate a need for increased capacity.

The semiconductor market is continuing to strengthen with rising investment levels among chip makers, albeit from a low level, although photomask makers are still struggling with excess capacity in many cases.

The substrate market is expected to show positive development with a recovery from the previously low levels. Micronic anticipates continued collaboration with leading companies in the substrate market regarding LDI applications. Discussions are underway with collaboration partners to decide on the future pace of development projects in this area. The first LDI products are expected to be evaluated by leading companies in 2010 in pace with their successive changeover to more advanced production.

MICRONIC ANNUAL REPORT 2009

BUSINESS AREA SURFACE MOUNT TECHNOLOGY EQUIPMENT

Micronic's business area Surface Mount Technology equipment (SMT) operates under the MYDATA brand. The business area has a leading market position in the flexible electronics production segment, offering advanced systems for surface mounting of components on printed circuit boards and stencil-free application of solder paste.

OPERATIONS

MYDATA is a market leader in its segment, with market shares of around 25 percent in the US and Europe. Sales to customers outside Sweden account for more than 90 percent of sales. In 2009 development, production and final assembly were performed at the office in Bromma outside Stockholm. The business area has an R&D office in Gothenburg and subsidiaries and sales offices in China, France, Germany, Japan, Singapore, the Netherlands, the UK, and the US. The subsidiaries and sales offices are located in the key geographic markets. There are also a large number of external distributors and agents around the world. The business area serves the part of the market which produces electronics with a relatively high added value. Here guiding principles such as high quality, short set-up times and flexibility are crucial. A typical end customer comes from the advanced industrial electronics, medical technology or defense industries. Key drivers in these segments are a broader spectrum of technology content, expanding areas of application and shorter product life cycles. This is leading to an increasing degree of complexity and a growing challenge to produce cost-effectively.

MYDATA's history goes back to the mid-1980s when surface-mount machines were designed for long production series and with long set-up times. An opportunity existed to fill a gap in that segment of the market which produced shorter series and more complex PCBs, where available surface mount systems were less efficient. In 20 years the ideas have been developed into a market-leading production technology for flexible surface mounting of components on PCBs.

KEY FIGURES, PRO FORMA	2009	2008
Order intake, incl. service, SEK million	463	592
Net sales, SEK million	473	625
Operating profit/loss, SEK million	-73	-69
Operating margin, %	-15,5	-10,4
Investments, SEK million	5	19
Average number of employees	259	303

NET SALES 2009 PRO FORMA BY APPLICATIONS

NET SALES 2009 PRO FORMA BY GEOGRAPHICAL MARKET

MICRONIC ANNUAL REPORT 2009

SURFACE MOUNTING IS THE LINK BETWEEN THE SEMICONDUCTOR INDUSTRY AND THE FINISHED PRODUCT.

MYDATA's machines complete the printed circuit board (PCB) in two process steps. Firstly solder paste is applied on the PCB's contact surfaces, followed by mounting of the components.

To manufacture a finished circuit board, a digital description is used – with information about the circuit board's dimensions, material list, contact surfaces and component location – and then translated into a machine program.
MYDATA's machines then complete the circuit board in two process steps: solder paste is first applied to the PCB's contact surfaces, followed by mounting of the components. At a subsequent stage, the equipped board is heated in a soldering oven and the contact surfaces of the components and circuit board are joined.
The finished circuit board can be as small as a few square millimetres in size, and all the way up to $600 \times 900 \mathrm{~mm}$ with a weight of $15 \mathrm{~kg}$. It can be equipped with anything from a few components, up to several thousand. The smallest components are no larger than a grain of sand, and the largest and most complex have several thousand conductors. All are assembled with micrometer precision at dizzying speeds.
The circuit board then passes through an additional processing step – final assembly – where the final product is produced.
MYDATA's production equipment is used for manufacturing electronic products intended for application areas such as energy technology, the automotive industry, medical technology, aerospace, telecommunications and the aviation industry.

MICRONIC ANNUAL REPORT 2009

18
MICRONIC ANNUAL REPORT 2009

OPERATIONAL GOALS FOR SMT EQUIPMENT IN 2010

Consolidate the business area's market-leading position through the new generations of pick&place and jet printing machines.
Develop and add value to the service business to increase customer satisfaction and raise sales and profitability.

THE MARKET FOR SMT EQUIPMENT

In 2009 the global market for surface mount equipment contracted sharply as production volumes in the electronics industry fell. In 2008 the market for surface mount equipment was worth USD 2.4 billion. Market figures (PROTEC MDC, January 2010) show that sales of surface mount machines declined by 54 percent compared with 2008, although a recovery began in the fourth quarter. The recovery has been strongest and clearest in China, which is dominated by high-volume production. In the US, Europe and Japan the recovery in the fourth quarter was less pronounced.

The after market for SMT equipment also fell in 2009 and activity in the business area's main markets for equipment used in electronics production remains subdued.

Although electronics manufacturers are now signalling a stabilization and growing order books, production volumes remain below 2008 levels for most companies. This means that few electronics manufacturers currently need to expand their production capacity and are therefore reluctant to invest in new equipment.

MARKET DRIVERS

Investments in surface mount systems are driven by three main needs: increased production capacity, new technological requirements such as an increased component mix or new, smaller components, and the need to replace old production lines. Capacity requirements in the electronics industry have a strong impact on the market. The volume of products sold in the semiconductor market has therefore been a good indicator of future capacity requirements and sales volumes in surface mount equipment. Historically, MYDATA's sales have mirrored the semiconductor market with a lag of about two quarters.

MARKET OUTLOOK

When sales volumes in the semiconductor market fell in the fourth quarter of 2008 as the economy weakened, manufacturers cut their production capacity and closed older factories. Investments in new production capacity almost came to a halt. In the third quarter of 2009 the semiconductor market is showing clear signs of recovery (IC Insights, November 2009) in the form of growing sales volumes and increased capacity use. IC Insights (Research Report, October 2009) forecasts a V-shaped recovery in component sales following a sharp contraction in the fourth quarter of 2008 and the first quarter of 2009 to mid-2008 levels. The recovery began in the second and third quarters of 2009, and the market is expected to have stabilized in the fourth quarter. The semiconductor market is expected to continue to strengthen in 2010 and 2011 (Prismark, November 2009). No technological shifts with the potential to significantly change the production process for electronics are in prospect for the foreseeable future. However, the evolution of electronic products, especially in the consumer segment, is creating a pressure to

SMT EQUIPMENT

DRIVING FORCES

Shorter product life cycles
Profitability
Quality
Miniaturization

TECHNOLOGY TRENDS

Flexible production
Shorter series
Higher productivity
Automation
Higher yield
Shrinking component size
More compact PCB design
Package on Package (PoP)

EFFECT ON MYDATA

Meet the need of no or very short set-up times
Increased number of mounted components per time unit and floor space
High utilization of production equipment
Demand for highly automated production equipment
Increasing requirements for precision and inspection in the mounting process
High demand on placement accuracy
Demand for smaller solder paste dots and handling of different jetting heights

BUSINESS AREA SMT EQUIPMENT

produce more and smaller components and PCBs with high-density packaging that need to be assembled ever faster. Price competition in consumer products is also leading to a shift in high-volume production of electronics to areas like inland China, Vietnam, Brazil and Mexico. However, the market for flexible electronics production, where MYDATA's products are well suited, does not follow the same geographic pattern, but is more diversified.

Through the renewal of its product portfolio MYDATA has strengthened its market position in a falling market. Relative to the market as a whole (PROTECT

MDC, January 2010), MYDATA continues to capture market share in its key markets in the US and Europe. The installed base of SMT equipment is the basis for after market sales.

CUSTOMERS

There are more than 3,500 MYDATA machines installed at 1,900 sites worldwide. The customer base is diverse, covering everything from small manufacturers to the large global electronics companies. The common denominator for these customers is low- to medium-volume production, where the PCBs contain the latest technology and have a high added value. The customers are dependent on flexible equipment that enables rapid shifts between different products.

The business area's market-leading position is based on a unique combination of high quality and innovative system solutions that meet customer requirements in a flexible production environment.

For the customer the benefits are short lead times and the ability to achieve a low production cost per unit. In addition to a high flexibility and rapid shifts in production, the business area's products also minimize the need for operator intervention.

The customers include contract manufacturers in the electronics industry as well as manufacturers of own brand products in the aerospace, avionics, energy, computer and telecom industries, which require a high degree of flexibility in electronics production.

The new generation of machines with significantly increased production capacity has expanded the potential market segment to include longer production series, that are, for instance, found in the automotive industry.

A typical customer has two to three production lines, a wide variety of products and a high cost awareness, constantly meets new challenges in the form of new packaging types and new PCB models, and is dependent on maintaining a high quality and level of service to its end customers.

Most of the customers are based in North America and Europe, where the cost of labor is relatively high. The comparatively limited input of labor that is required to adjust production from one PCB type to another is therefore appreciated by customers.

MYDATA is positioned towards industries with need for low- to mid-volume production where PCBs with a high added value is manufactured

MICRONIC ANNUAL REPORT 2009

PRODUCTS AND SERVICES

The product range is divided into four areas: pick & place equipment, jet printing equipment, software and after market.

PICK & PLACE

The business area's surface mount equipment offers efficient assembly in flexible electronics production, for low and medium volumes. In 2008 the business area introduced an entirely new generation of MY100 offering 70 percent higher capacity, higher accuracy and improved reliability. In 2009 the generational shift from the previous machinery series to MY100 was completed with the launch of two new models.

With the new MY100 series, the business area can address a larger market and more customer segments, ranging from very small electronics makers to major companies with a need for medium volume production. By offering multiple MY100 machines, or 'synergy lines', the business area can meet relatively large capacity requirements without compromising on flexibility - something that is unique for MYDATA's system.

JET PRINTING

MY500 employs a revolutionary jet printing technology for applying solder paste to printed circuit boards (PCBs). MY500 shoots solder paste without touching the

PICK & PLACE EQUIPMENT
System	Application	Mounting speed
MY100DX	Surface mounting of components	34,000 cph
MY100SX	Surface mounting of components	21,500 cph
MY100LX	Surface mounting of components	15,000 cph
JET PRINTING EQUIPMENT
System	Application	Mounting speed
MY500	Application of solder paste	30,000 cph

PCB onto those surfaces where components will later be mounted. The jet printing technology challenges the traditional method of applying solder paste and has many benefits. For instance, no stencils are required, allowing for faster and easier preparation and change-overs between different products. Other benefits are that the amount of solder paste can be optimized for each package type, resulting in a higher production quality, and that the technology enables more complex assembly methods.

SOFTWARE

Several different software modules are offered for all parts of the electronics production process. These modules can be integrated with other software systems used by the customer, such as inventory management and ERP systems. The software modules include programs for optimizing production speed, streamlining adjustments to production, preparing new products and generating and archiving traceability information, which is a growing requirement in the electronics industry. MYDATA's advanced software functions allow customers to achieve an efficient manufacturing process with a high degree of automation in a highly complex production environment.

AFTER MARKET

The business area provides global service and support, spare parts and accessories for its machines and software. On-site support and service is provided by qualified service technicians based at 30 service centres around the world. In addition to these, there are three application centres located

MICRONIC ANNUAL REPORT 2009

in Sweden, Singapore and the US, which provide round-the-clock support to customers throughout the world. Additional support is provided by telephone and over the Internet. In 2009 business area SMT launched several new services which help to support customers' production environments and increase capacity utilization of installed machinery.

RESEARCH AND DEVELOPMENT

In 2009 research and development activities were conducted at the business area's office in Bromma and at the development office in Gothenburg. Development activities in 2009 centered on continued development of the new generations of MY100 and MY500, which were launched the year before. Capacity has been significantly increased in both model series and software for preparation, product planning and follow-up has been updated. A new system for automated storage of components has also been introduced.

Since 2008 the business area's development projects have been conducted using the PULS project management method. The new method has helped to significantly improve development efficiency. PULS has been instrumental in streamlining the whole production chain from drawing board to finished product and commercial launch. Initiatives for development projects

are developed based on market and technological conditions. Projects that are deemed interesting but risky are taken to the feasibility study stage.

During the course of a development project daily PULS meetings are held at which the project is visualized for all project participants in order to highlight the participants' work as well as elements that help to create value. The completion of projects to schedule has brought forward the date at which marketing activities can begin, strengthened collaboration among different departments and cut down on administration.

Business area SMT's development strategy for the years ahead is based on even shorter product development times, which will require a greater degree of collaboration with external parties.

Key technologies are protected by patents. At year-end 2009 the business area had 149 patents in about 20 patent families registered in the US, Asia and Europe. Key patent areas cover various aspects of the business area's jet printing technology.

PRODUCTION

In 2009 all production was carried out at the business area's facilities in Bromma. Short delivery times and a high degree of flexibility are two key priorities. This requires good planning and supply chain

management as well as a broad pool of talented individuals. Due to the technical complexity of the products, many of the employees have expertise in both electronics and mechanics.

The machines are modular. A small share of the modules are standardized and the rest can be configured according to customer demand. They need to be assembled rapidly, which requires a high degree of care and precision. Calibrating the modules correctly and ensuring that all tests are performed are the keys to problem-free operation. Installation and start-up are performed by the business area's local service organizations or by distributors in various locations around the world.

OUTLOOK

An enhanced product portfolio for SMT equipment and increased sales of accessories in the fourth quarter, together with signs of a rising component volume in the semiconductor industry and an improved business situation for electronics manufacturers, is expected to generate increased demand for SMT equipment over time.

MICRONIC ANNUAL REPORT 2009

EMPLOYEES, ENVIRONMENT AND QUALITY

In 2009 Micronic continued its ongoing efforts to ensure a safe work environment. Quality assurance activities centered on developing processes aimed at improving efficiency by optimizing the use of available resources. In business area Pattern Generators (PG) an Employee Development Process (EDP) was implemented.

EMPLOYEES

Almost a third of Micronic's employees work on research and development with the aim of meeting the stringent requirements of the electronics industry. The workforce is diverse, covering more than 15 nationalities, which is a reflection of Micronic's international customer structure. The goals for Micronic's human resources activities in 2009 were to:

Implement the Employee Development Process (EDP) in 80 percent of the PG business area.
Design a global talent development project.
Draw up a single regulatory framework governing general terms and conditions of employment in Micronic's two business areas, Surface Mount Technology equipment (SMT) and PG.

To increase the focus on the individual's ability and potential, business area PG has developed an internal Employee Development Process (EDP). A pilot project covering staff in executive positions was completed in 2008 and in 2009 EDP was implemented for 90 percent of staff, which means that the target for 2009 was exceeded by ten percent. Under the program, employees make self-assessments and the company provides feedback by taking account both of what has been achieved and the way in which it was been achieved, i.e. how the work was performed. Individual targets are set and each employee's potential is assessed.

To ensure Micronic's long-term competitiveness and innovative power, the company has initiated a talent development project. In the second half of 2009 resources were invested in drawing up a single set of employment terms for the two business areas, which will apply as of March 2010. The number of employees declined by 32 in 2009. At year-end 581 people were employed in the Group.

HUMAN RESOURCES ACTIVITIES IN 2010

Continue the work on harmonizing terms and conditions of employment for the two business areas.
Implement a talent development project.
Implement a project aimed at introducing a classification system for job positions.

VALUES

In 2010 a project aimed at developing and implementing a common set of values globally will be initiated.

OCCUPATIONAL HEALTH AND SAFETY

All activities are based on an occupational health and safety policy which states that health and safety considerations must be taken into account in all activities. The company works systematically and proactively to create the best possible social environment and the safest possible work conditions. One occupational injury was reported in 2009, though not serious.

QUALITY

As part of its operational development program, Micronic works continually to improve its quality management system. The goal is to increase efficiency, support the employees in their day-to-day work and further improve product quality.

QUALITY ASSURANCE ACTIVITIES IN 2009

In 2009 business area SMT recertified its quality management system in accordance with ISO 9001:2008 standard. Improved productivity and quality measurements were introduced for the business area's production activities with the aim of identifying non-value-creating activities and thus cut lead times.

A web-based system for quality feedback and follow-up with suppliers was implemented and a new issue tracking system was introduced in customer support.

Business area PG has used a quality assurance method called value stream mapping that identifies which steps in a process add value, and which do not. All members of the team work on the whole process, enabling them to see clearly where value is created and what is redundant. Value stream mapping has highlighted that a risk of quality issues often arises when a task is handed over from one department to another. The work is supported by and conducted in accordance with methods and principles established under the Lean Thinking approach, which the business area applies.

In 2009 value stream mapping was used to improve the efficiency of the:

Process for customer complaints.
Product development process, from design concept to fully developed components, resulting in a halving of lead times.
Quality assurance process, which led to smaller inventories of materials.

Overall, the quality assurance activities that have been developed have led to efficiencies and savings.

In 2009 customers took a growing interest in helping to develop Micronic's quality assurance and improvement activities. This was driven by demands for higher-quality products, faster response times and improved service provision, which are probably a consequence of the fact that the market is increasingly driven by an emphasis on costs.

MICRONIC ANNUAL REPORT 2009

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23

QUALITY ASSURANCE ACTIVITIES IN 2010

In 2010 Micronic's quality assurance activities will focus on:

Continuing to establish Lean Thinking as a concept for developing the organization in a way that increases its flexibility, customer focus and competitiveness.
Continuing our efforts to drive improvement projects in line with needs and commercial requirements.
Establishing a single quality assurance system for the entire Group where the guiding principles are to identify and implement best practice from each business area, and to balance efficiency and product quality.

ENVIRONMENT

Micronic conducts no operations that require notification to the environmental authorities, with the exception of the use of refrigerants in the cooling plant. Nor is Micronic subject to the EU's Waste Electrical and Electronic Equipment Directive (WEEE) on producer responsibility or the Restrictions of Hazardous Substances Directive (RoHS). Although the impact on the environment from Micronic's manufacturing activities is not that significant, the company has an explicit long-term objective to minimize its environmental impact. As energy use represents Micronic's single biggest impact on the environment, the company focused its efforts in 2009 on minimizing this impact.

The main sources of environmental impact in Micronic are:

Energy use.
Purchasing of products, materials, chemicals and services.
Transports.
Use of developer and other chemicals.

ENVIRONMENTAL ACTIVITIES IN 2009

In 2008 the company invested in a geothermal heating system at its office in Täby. The system remained operational throughout 2009 and has proved highly profitable, resulting in a saving of 160 cubic metres of oil over the course of the year. Micronic is planning further investments in increased geothermal heating capacity in the coming year.

A study has shown that there is a significant potential in using geothermal cooling for cooling machines and channelling the excess heat back into the ground. This increases the temperature of the ground, raising the efficiency of the geothermal heat pump. The benefit of the investment doubles, as the cooling becomes more effective and the ground is heated.

In 2009 Micronic developed a method for taking care of products handed in for recycling by customers in an environmentally appropriate manner. 100 percent of a

pattern generator can now be sorted into various fractions and recycled.

SUBCONTRACTORS

All preferred suppliers were offered to conclude purchasing agreements. These contain provisions on ISO 14000-compliant environmental management systems as well as ethics and work conditions. However, due to the small volumes purchased, Micronic has no real leverage to influence the environmental activities of its suppliers. Instead, the driving forces come from the big semiconductor and display makers.

ENVIRONMENTAL ACTIVITIES IN 2010

Work on improving energy efficiency will continue, as this has proved to be both profitable and green.

As shown in the graph, factors with an environmental impact at the office in Täby were reduced significantly in 2009.

ENVIRONMENTAL IMPACT PER EMPLOYEE (BASE YEAR 2005)

CORPORATE GOVERNANCE REPORT

Effective principles for corporate governance are vital in ensuring that companies are managed in an efficient and controlled manner and in accordance with their strategies. Corporate governance at Micronic is aimed at creating conditions for strong and active ownership, establishing a clear division of roles and responsibilities between the management and control organs and ensuring transparency towards the shareholders, the capital markets and other stakeholders.

CORPORATE GOVERNANCE AT MICRONIC

Micronic has complied with the Swedish Code of Corporate Governance since its inception, and has adapted its corporate governance to the revised Code. Micronic's corporate governance is organized according to the model shown below. Aside from external regulations, there are internal rules that provide a platform for effective governance of operations. Examples of internal rules that are designed to enhance and strengthen control include procedural plans and instructions for the board and the CEO, as well as the authorization policy, finance policy, communications and investor relations policy.

This corporate governance report and the board's report on internal control over financial reporting are not part of the formal annual report and have not been reviewed by the company's independent auditors. Information about Micronic's corporate governance is provided on the website www.micronic.se, where documents such as the Articles of Association, notices to attend and minutes from general meetings can also be found.

RULES FOR CORPORATE GOVERNANCE

Corporate governance in the Micronic Group is regulated by Swedish law, such as the Swedish Companies Act, the Swedish Code of Corporate Governance and NASDAQ OMX Stockholm's rules for issuers. In addition, compliance with Swedish and international accounting laws ensures that the company's financial accounting and reporting meet the established requirements.

The Swedish Corporate Governance Board was set up to monitor and develop the Swedish Code of Corporate Governance.

COMPLIANCE WITH THE CODE

Micronic complies with the Code without exceptions.

MICRONIC ANNUAL REPORT 2009

Corporate governance report

GENERAL MEETING OF SHAREHOLDERS

Pursuant to the Swedish Companies Act, the general meeting of shareholders is the company's highest decision-making body. The responsibilities of the Annual General Meeting, the AGM, include adoption of the profit and loss account and balance sheet, election of board members and auditors, determination of fees and the transaction of other business as required by law or the Code. Significant decisions passed at general meetings are published through a press release immediately following the meeting and the meeting minutes are published on the company's website.

2009 AGM

The 2009 AGM was held on Wednesday, April 1, 2009, in Täby and 44 percent (48) of the votes were represented.

2010 AGM

The 2010 AGM will be held on Monday, April 12, 2010, 5 p.m., in the Galleriet conference room at Nasby Slott, Djursholmsvägen 30 in Täby. No later than four weeks prior to AGM, a notice to attend the AGM will be published in Svenska Dagbladet and be posted on the Post-Inrikes Tidningar's website. The notice will be also posted on Micronic's web site www.micronic.se.

NOMINATION COMMITTEE

The AGM resolves on the principles for appointment of the nomination committee.

By decision of the 2009 AGM, the nomination committee consists of the board chairman and four members representing the four largest shareholders at the end of August, for a total of five members. The tasks of the nomination committee are to evaluate and recommend candidates as Chairman of the AGM, the Board Chairman, directors and auditors for election by the AGM.

The committee's responsibilities also include recommendations on remuneration to the Board Chairman, the Vice Chairman and other board members, board committee members and auditors. No remuneration is payable for work on the nomination committee.

All shareholders are given the opportunity to recommend board candidates for evaluation by the nomination committee within the framework of its duties.

The nomination committee has held several meetings ahead of the 2010 AGM and has maintained regular informal contact. As a basis for its recommendations, the nomination committee determines whether the sitting board members have the requisite skills and characteristics in view of the company's position and future direction. The committee formulates the qualifications for any new directors that need to be recruited according to this assessment and carries out a systematic procedure for seeking candidates for vacant board seats, with consideration to any recommendations submitted by the shareholders.

ATTENDANCE AT AGM

holders. The committee's recommendations are published in the notice to attend the AGM and on Micronic's website. The nomination committee presents a report on its work at the AGM.

The company's auditors are appointed every four years. The audit committee assists the nomination committee in preparing recommendations for nomination of auditors and fees for audit work. The current auditors were elected by the 2006 AGM. A new auditor election will be held at the 2010 AGM.

BOARD OF DIRECTORS

Since the 2009 AGM, the board of directors consists of six members with no deputies. An extraordinary general meeting (EGM) on July 2, 2009, elected Rune Glavare as Chairman, Lena Treschow Torell as Vice Chairman and Göran Malm, Magnus Lindquist, Åke Svensson and Patrik Tigerschiöld as regular members.

The composition of the board and the independent status of the directors in relation to the company, its management and major shareholders are shown in the table on page 26. The responsibilities of the board are prescribed by the Swedish Companies Act, but its work is also regulated by the Code and by the procedural plan that is adopted yearly by the board. The procedural plan defines the division of responsibilities between the board and its committees and between the board and the CEO, as well as establishing the frame

COMPOSITION OF THE NOMINATION COMMITTEE¹)

Name	Representing	Holding at September 30, 2009
Patrik Tigerschiöld	Skanditek Industriförvaltning AB	38%
Annika Andersson	Fjärde AP-fonden	5%
Peter Edwall	Pharos Invest AS	3%
Kerstin Stenberg	Swedbank Robur	3%
Rune Glavare	Chairman of the Board in Micronic	–

¹) The nomination committee was appointed at the end of August. Catella reduced its ownership in Micronic after that date and withdrew its right to nominate a member to the nomination committee. The chairman then contacted Pharos Invest, who was the next shareholder in size at September 30, 2009.

MICRONIC ANNUAL REPORT 2009 25

work for financial reporting. According to the procedural plan, the tasks of the board include:

Formulation of a long-term strategy and the related business plan and budget, as well as approval and adoption of the annual report and other public reports, interim reports, important policies and authorization instructions.
Appointment of the CEO and performance evaluation of the CEO's and the executive management.
Adoption of rules for internal control, annual follow-up of the effectiveness of internal control and assessment of the adequacy of internal control over financial reporting, as well as annual evaluation of the need for an internal audit.
Decisions regarding major investments.
Decisions regarding far-reaching agreements.
Determination of the procedures and focus for the board's work, for example through the appointment of an audit committee and remuneration committee and through evaluation of board performance
Annual follow-up of compliance with the guidelines for remuneration to senior executives adopted by the AGM
Annual recommendation of remuneration guidelines to the AGM.

BOARD CHAIRMAN

The Chairman is responsible for overseeing that the board discharges its responsibilities in accordance with the Swedish Companies Act, the Code and the procedural plan. Through ongoing contact with the CEO, the Chairman monitors the company's development and ensures that the board is continuously provided with the information required to perform its duties. The Chairman also represents the company in matters related to shareholder issues.

At the AGM on April 1, 2009, Lena Treschow Torell was elected as Board Chairman. At the EGM on July 2, 2009, Rune Glavare was elected as Board Chairman.

BOARD REMUNERATION

The 2009 AGM resolved that board fees for the period until the end of the next

COMPOSITION OF THE BOARD AND ATTENDANCE

	Period	Function	Attendance	Independent^{1)}	Elected in
Rune Glavare	2/7–31/12	Chairman	12/12	no	2009
Lena Treschow Torell	1/1–31/12	Vice chairman	20/20	yes	2004
Göran Malm	1/1–31/12	Member	18/20	yes	2002
Magnus Lindquist	1/1–31/12	Member	19/20	yes	2007
Åke Svensson	2/4–31/12	Member	14/17	yes	2009
Patrik Tigerschiöld	2/7–31/12	Member	10/12	no	2009
Sigrun Hjelmquist	1/1–2/7	Member	8/8	yes	2007
Sven Löfquist	1/1–2/7	Member/CEO	8/8	no	1998
Jörgen Centerman	1/1–1/4	Member	3/3	yes	2004

1) Independent in relation to the company, its management and major shareholders in accordance with the criteria in the Code.

COMPOSITION OF THE AUDIT COMMITTEE AND ATTENDANCE

Name	Attendance^{1)}
Magnus Lindquist, chairman	6/6
Rune Glavare	5/5
Patrik Tigerschiöld	2/5
Sigrun Hjelmquist	1/1
Åke Svensson	0/1

1) Number of meetings from the 2009 AGM to adoption of the annual report.

COMPOSITION OF THE REMUNERATION COMMITTEE AND ATTENDANCE

Name	Attendance^{1)}
Rune Glavare, chairman	1/1
Lena Treschow Torell	2/2
Åke Svensson	0/1
Göran Malm	1/1
Sigrun Hjelmquist	1/1

1) Number of meetings in 2009.

AGM would be paid in a total amount of SEK 1,375,000, of which SEK 500,000 would be paid to the Chairman, SEK 275,000 to the Vice Chairman and SEK 200,000 kronor to each of the other board members not employed by the company. Furthermore, the AGM resolved that remuneration to the members of the board committees would be paid in an amount of SEK 50,000 per member and committee assignment.

BOARD ACTIVITIES

In 2009 the board held 20 meetings, of which two were statutory meetings in connection with the AGM and EGM. A number of meetings have been held per capsulam, i.e. by circulation or letter. The minutes from these meetings are recorded by the company's CFO.

In order to achieve greater efficiency and depth in its treatment of certain matters, the board has set up two committees, the audit and remuneration committee, each of which is made up of three board members. Agendas for regular board meetings are prepared by the Chairman together with the CEO. Recurring items on the agenda are an update on the business

situation and a review of the company's financial development. In connection with every meeting, the board members meet in a session without the presence of the CEO. The Chairman is then responsible for feedback to the CEO.

Ahead of each board meeting, the members of the board are provided with written material as a basis for future discussions and decisions. During the board meetings, representatives from the executive management and other individuals take part to report on matters in their respective areas.

EVALUATION OF BOARD PERFORMANCE

According to the procedural plan, the board yearly evaluates its performance.

SUMMARY OF BOARD MEETINGS IN 2009

At each board meeting, matters such as the business situation and financial reporting are dealt with. The audit and remuneration committees have reported on their respective activities and presented matters for decision by the board. The independent auditors took part in one meeting during the year to meet with the entire board and to describe and present their conclusions from the audit.

MICRONIC ANNUAL REPORT 2009

Other matters taken up at board meetings in 2009, aside from ongoing financial reporting, adoption of interim reports and updates on the business situation, included:

a decision on the acquisition of MYDATA automation AB through a non-cash issue
a review of long-term strategies for the company's two business areas
the appointment of a new President and CEO
a decision on guidelines for remuneration to the presidents of the foreign subsidiaries
adoption of a budget for 2010
the integration process between Micronic and MYDATA

AUDIT COMMITTEE

Every year, the board appoints an audit committee consisting of three board members not employed by the company. A majority of audit committee members must be independent from the company and its management and at least one member must be independent from the company's major shareholders.

Since the statutory meeting on July 2, 2009, the audit committee consists of Magnus Lindquist (chairman), Rune Glavare and Patrik Tigerschiöld.

The audit committee has no decision-making authority. Its foremost task is to support the board in ensuring high quality in the company's financial reporting. This work includes internal control, continuous review of critical accounting and valuation issues and examination of the company's external financial reports prior to the board's approval of these. The company's CFO and Vice President Finance take part in audit committee meetings in order to present reports.

The committee also serves as the primary contact with the company's auditors and meets with these, above all in connection with the quarterly interim reports. The audit committee reports its observations to the board and is responsible for evaluating the quality of audit work.

The audit committee assists the nomination committee in preparing recommendations for nomination of auditors and fees for audit services.

The audit committee establishes guidelines for which non-audit services may be procured from the company's appointed auditors. Certain meetings between the audit committee and the independent auditors take place without the presence of members employed by the company.

The audit committee monitors the company's internal work in preparation for issuance of the board's report on internal control over financial reporting.

REMUNERATION COMMITTEE

Every year, the board appoints a remuneration committee consisting of three board members not employed by the company.

Since the statutory meeting on July 2, 2009, the remuneration committee consists of Rune Glavare (Chairman), Lena Treschow Torell and Åke Svensson. Until July 2, the remuneration committee consisted of Göran Malm, Lena Treschow Torell and Sigrun Hjelmquist.

The remuneration committee has no decision-making authority. Its primary tasks are to recommend salary, other remuneration and other terms of employment for the company's CEO. The committee also prepares proposals for principles for remuneration and other terms of employment for other senior executives and subsidiary presidents that are market-based and consistent with the company's objectives. Furthermore, the committee assists the board in preparing recommendations for incentive schemes.

The remuneration committee continuously reports on matters dealt with to the board.

PRINCIPLES FOR REMUNERATION AND OTHER TERMS OF EMPLOYMENT FOR MICRONIC'S EXECUTIVE MANAGEMENT

The 2009 AGM approved principles for remuneration to the executive management. The proposed principles for remuneration and other terms of employment for Micronic's executive management are prepared by the remuneration committee. The main principle is to offer senior executives market-based remuneration and other terms of employment. Factors such as expertise, experience and performance are significant in determining the amount of remuneration at the individual level. The total remuneration package consists of basic salary, variable salary, pension and other benefits. The principles approved for 2009 do not differ significantly from those for 2008. For a more detailed description of the principles applied in 2009 and those proposed for 2010, see the report of the directors and Note 13 on pages 60–63. The remuneration committee also assists in ensuring compliance with the principles for remuneration to senior executives that have been approved by the AGM.

SALARY AND REMUNERATION FOR SENIOR EXECUTIVES

For complete details about expensed remuneration to the CEO and other senior executives in 2009, see Note 13 on pages 60–63. The executive management is presented on page 32–33.

AUDIT

The company's independent auditor is elected by the AGM to serve for a period of four years. The 2006 AGM elected the accounting firm of KPMG as the company's auditor, at which time KPMG appointed Authorized Public Accountant Anders Malmeby as Auditor in Charge of the Group's accounts. KPMG has been appointed to serve for the period until the 2010 AGM. At the request of the board, the company's auditor performs a review of all quarterly reports. Other statutory audits of the annual report, annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and CEO are carried out in accordance with generally accepted accounting standards in Sweden (RS). Once a year, the auditors meet with the entire board. The independent auditors meet with the audit committee in connection with adoption of the company's interim financial statements. In connection with the acquisition of MYDATA automation AB, the board decided to appoint KPMG as auditor of the MYDATA group until the 2010 AGM.

MICRONIC ANNUAL REPORT 2009

FINANCIAL REPORTING TO THE BOARD

According to the procedural plan, the board determines which reports are needed in order for the board to continuously monitor the company's development. The board examines both interim reports and the annual report before these are published. The quality of the company's financial reporting is evaluated primarily through the audit committee. The audit committee meets regularly with the CFO and the company's independent auditors to discuss matters of significance in the accounting area. The audit committee reviews interim reports before these are submitted to the entire board in order to take up items of material significance with the independent auditors.

EXTERNAL FINANCIAL INFORMATION

In accordance with the Investor Relations policy that is adopted yearly by the board, the company provides continuous information on its financial position in the form of quarterly, year-end and annual reports, as well as press releases in connection with major orders and other significant events.

When the interim and year-end reports are published, the company holds presentations for analysts, investors and the media. During the year, the executive management regularly meets with analysts and investors at several locations around the world. In connection with trade fairs and seminars, the media is given opportunities to meet with the company's representatives. Every year, the board adopts a corporate communications policy to establish the rules and procedures for communication and specify which individuals may speak on behalf of the company in various contexts.

All information that is distributed via press releases is also posted on the company's website, together with other information of value, such as a description of Micronic's application of the Code.

THE BOARD OF DIRECTORS' REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING IN 2009

INTRODUCTION

As stated in the Swedish Companies Act and the Swedish Code of Corporate Governance, the board of directors is responsible for internal control. This report has been prepared by the board in accordance with the Code and the guidelines issued by FAR SRS (the Institute for the Accountancy Profession in Sweden) and Svenskt Naringsliv (the Confederation of Swedish Enterprise), and is accordingly limited to internal control over financial reporting. The report has not been reviewed by the company's auditors.

Micronic's internal control is structured according to the established Internal Control – Integrated Framework, COSO, which divides internal control into five components: Control environment, risk assessment, control activities, information & communication and monitoring. COSO defines internal control as follows:

Internal control is a process, effected by an entity's board of directors, management and other personnel, designed to provide reasonable assurance regarding the achievement of objectives regarding the effectiveness and efficiency of operations, the reliability of financial reporting and compliance with applicable laws and regulations.

The following description deals primarily with those aspects of internal control that are related to financial reporting.

DESCRIPTION AND CONTROL ENVIRONMENT

The basis for internal control over financial reporting is the control environment, where the central components include the organizational structure, decision-making channels, powers and responsibilities and corporate culture as expressed in the form of internal policies and guidelines. Share values create a common approach and strengthen the organization, and thereby lead to improved efficiency and internal control.

In 2009 Micronic acquired MYDATA automation AB, whose operations differ from those previously conducted by Micronic. The principles for internal control and the control environment for the new group since July 2, 2009, have not yet been completed. This is a process that will start when these operations are conducted in the same premises and have a common management organization and business system. The following description refers primarily to the operations in Micronic that have worked with these issues in the same manner since adoption of the Code.

Activities in the pattern generator business area are conducted primarily in a single location and are therefore judged to be of limited complexity. This, in turn, means that the structure of the organization is simple and clear. Normative documents have been established in the form of procedural plans for the board and its audit committee and instructions for the CEO. The board has also adopted guidelines for external reporting of financial information and a number of policies and instructions, such as instructions for authorization of business transactions.

The board and management have determined the importance of timely and accurate reporting, and therefore also of maintaining an effective accounting function. The level of staffing and expertise in the accounting function is continuously monitored by the executive management. A strong controller function in the accounting organization also ensures that all business activities are evaluated and their efficiency optimized.

Efforts to develop the company's internal control activities are conducted according to a long-dated plan that is updated yearly and approved by the audit committee and the board.

Responsibility for creating processes with a high degree of internal control is assigned to the respective departmental managers. Employees from each area of operation take part in process reviews supervised by the accounting function as a step in documenting and evaluating significant processes.

RISK ASSESSMENT

The company has processes for risk assessment and control to ensure that the risks to which the company is exposed are managed within the limits established by the board.

Micronic's management continuously analyzes the company's business processes for assessment of efficiency and risks,

MICRONIC ANNUAL REPORT 2009

including the identification of risks for errors in financial reporting. The company's support processes, including the financial closing processes, are also analyzed. The most critical business processes and most significant values, with regard to assets as well as business and product development, are found in the Swedish parent company. The annual process of evaluating internal control begins with an overall risk assessment based on significant items in the balance sheet and income statement. The risks are then graded and linked to processes. The processes that have been deemed of critical importance for Micronic after such evaluation include development, purchasing, production, sales, installation, financial closing and IT. The processes for payments and for salaries and pensions have also been deemed significant and are therefore evaluated. The risks for errors in financial reporting are identified and discussed by the audit committee. An examination of risk areas is also carried out by the board, primarily in connection with discussion and adoption of strategies and objectives.

CONTROL ACTIVITIES

The identified risks relating to financial reporting are dealt with through identified control activities in the company's processes. Many of these processes are documented, updated and improved on an ongoing basis. Due to the nature of Micronic's business, every external business transaction is monitored closely and the accounting function has in-depth insight into the process. The control structure also includes the established division of powers, roles and responsibilities and the management's monthly review of financial information.

INFORMATION AND COMMUNICATION

Micronic's information and communication channels are designed to promote complete, reliable and accurate financial reporting. This is accomplished by making steering documents such as internal policies, and guidelines with relevance for financial reporting available and known to the affected personnel via the company's intranet.

Staff members from the head office visit the subsidiaries and the reverse is also true; employees from the subsidiaries visit the head office to further improve their knowledge of the Group's processes and objectives.

MONITORING

The board has determined that the effectiveness of internal control will be monitored through a self-assessment of critical processes. In 2006 the audit committee established a plan for reviewing the most critical processes, with the greatest possible impact on the company's financial position, over a number of years. The plan is reassessed yearly to identify any possible needs for changes, which can lead to reprioritization.

Following an initial risk assessment, based on the consolidated balance sheet and income statement, a decision is made about which processes will be documented and assessed during the year. Staff from the accounting function, together with the affected employees, reviews how the process is working, documents the flow and evaluates the effectiveness of the process with respect to the identified risks and control activities with the help of a self-assessment in which employees from each area of operation evaluate the documented process and assess the identified risks and controls. This method involves staff from throughout the company, thus promoting a wide understanding for the importance of internal control, and retains responsibility for developing the processes within each respective area of operation. In 2008 Micronic completed the initial documentation and self-assessment of all processes that have been deemed significant. At the request of the board, some of the processes that had been evaluated internally also underwent an external evaluation. In 2009 an administrative phase was started that will include both updating of the documented process reviews and assessment of the observations made during both the internal and external evaluations.

Every year, the board commissions external parties to evaluate some of the processes that have been evaluated internally by the company. During 2009, the

processes for development and IT were evaluated. The external evaluation found no evidence of serious shortcomings but has resulted in a number of observations and proposed areas for improvement. Due to the ongoing integration of MYDATA since July 2, 2009, a decision was made during the year to not update the existing process documentation. This will be started when the integration process has lessened in scope, the respective operations have been merged to a greater extent and a uniform business system has been deployed. However, measures were taken during 2009 to internally evaluate the improvements proposed after the external evaluation of certain processes, and additional control activities have been introduced and carried out where deemed necessary.

Through the audit committee, the board establishes and oversees the evaluation processes that are carried out.

The audit committee maintains continuous contact with the independent auditors and is informed of their opinions and observations, which also contributes to the board's overall picture of the company's internal control.

Prior to board meetings where the quarterly financial statements are adopted, the audit committee has analyzed and assessed the financial information.

PLANNED ACTIVITIES IN 2010

For most units in the company, the acquisition of MYDATA automation AB has necessitated intensive efforts to coordinate the respective operations. In 2010 a group-wide business system will be taken into operation. A plan for how internal control activities will be carried out in the future will also be adopted.

STATEMENT

In light of the Group's structure and its management of risks in the processes described above, the board has not found it necessary to set up a special internal audit function.

MICRONIC ANNUAL REPORT 2009

BOARD OF DIRECTORS AND AUDITOR

RUNE GLAVARE

Born 1945.

Chairman since 2009.

Non-independent director.

President and CEO PartnerTech.

Education: M.Sc. Electronic Engineering.

Other board assignments: Chairman of Cobolt AB. Board member of PartnerTech AB and 3Nine AB.

Previous positions: President of Cobolt AB 2003–2007, Senior VP of Sanmina Europé 2000–2001, founder and CEO of Essex AB 1989–2000.

Committees at Micronic: Chairman remuneration committee. Director audit committee.

Shareholding in Micronic: 0.

LENA TRESCHOW TORELL

Born 1946.

Vice chairman.

Director since 2004.

Independent director.

Education: Ph.D. in Physics, Professor.

Other board assignments: Vice chairman of AB ÅF. Board member of Investor AB, SKF AB, Saab AB, DI AB and the Foundation for Chalmers University of Technology. Chairman of the Foundation for Strategic Environmental Research (MISTRA), the European Council of Applied Sciences and Engineering (Paris) and IVA (The royal Swedish Academy of Engineering Sciences).

Previous positions: Director of the European Commission's Joint Research Center in Brussels 1998–2001. Pro-Vice President for Chalmers 1995–1998. President for IVA 1998–2008.

Committees at Micronic: Director remuneration committee.

Shareholding in Micronic: 3,400.

MAGNUS LINDQUIST

Born 1963.

Director since 2007.

Independent director.

Partner Triton.

Education: Economist.

Other board assignments: Chairman of Alimak Hek Group AB. Board member of Bravida.

Previous positions: CFO of Autoliv, Inc. 2001–2008, CFO of Perstorp, 1996–2001. CFO of Stora Cell Group, Gävle, 1993–1996.

Committees at Micronic: Chairman audit committee.

Shareholding in Micronic: 0.

GÖRAN MALM

Born 1947.

Director since 2002.

Chairman 2007–2008.

Independent director.

Education: M.B.A.

Other board assignments: Chairman of North Asia, Strategic Holdings Ltd, Boathouse Ltd, Childrens Medical Foundation, HongKong, Smartpay, Jieyin Shanghai, Celestix Networks Singapore, and Sourcebynet Singapore. Board member of Samsung Electronics Co Ltd, Seoul, South Korea, Elife Tokyo, Dornier GmbH Singapore, UFI Mantova and Envac Stockholm.

Previous positions: SVP of Dell Corporation 1999–2000. SVP, General Electric Company 1997–1999. President and CEO GE Medical Systems Asia 1992–1996. Executive Vice President of SKF 1990–1991. Associate Professor at Göteborg University School of Business, Economics and Law 2005–2006.

Committees at Micronic: None.

Shareholding in Micronic: 0.

ÅKE SVENSSON

Born 1952.

Director since 2009.

Independent director.

President and Chief Executive Officer at Saab AB since 2003.

Education: M. Sc. in Electronic Engineering.

Other board assignments: Board member of the Confederation of Swedish Enterprise, the Association of Swedish Engineering Industries, The Observation Council of the Swedish National Agency for Higher Education, IVA (the Royal Swedish Academy of Engineering Sciences), the Royal Academy of War Sciences. Honorary Doctor at the Institute of Technology at Linkopings University.

Previous positions: Various positions in Saab 1976–2003.

Committees at Micronic: Director remuneration committee.

Shareholding in Micronic: 0.

PATRIK TIGERSCHIÖLD

Born 1964.

Director since 2009.

Non-independent director.

President at Bure Equity AB.

Education: M. Sc. Business and Economics.

Other board assignments: Chairman of PartnerTech AB, Vitrolife AB, Chimney Pot AB and AcadeMedia AB. Board member of Carnegie Investment Bank AB and Carnegie Asset Management A/S.

Previous positions: CEO of SE-Banken Allemansfonder AB 1995–1999.

Committees at Micronic: Director audit committee.

Shareholding in Micronic: 0.

AUDITOR

ANDERS MALMEBY

Born 1955.

Auditor for Micronic since 2006. Authorized Public Accountant, KPMG AB.

Other auditing assignments: Cybercom, Metro International, Generic and Fujitsu Siemens Computers.

MICRONIC ANNUAL REPORT 2009

Board of directors and auditor
31

Rune Glavare

Lena Treschow Torell

Magnus Lindquist

Göran Malm

Åke Svensson

Patrik Tigerschiöld

MICRONIC ANNUAL REPORT 2009

EXECUTIVE MANAGEMENT

PETER UDDFORS

Born 1964.

President and CEO.

Employed since 23 November 2009.

Education: Master's degree in Mechanical Engineering.

Previous positions: Leading positions at Cardo AB, AB Lorentzen & Wettre and Aldata Solution AB.

Shareholding in Micronic: 0.

Employee stock options: 0.

CARL-JOHAN BLOMBERG

Born 1952.

Sr. Vice President, Financial Officer.

Employed since 2002.

Education: M.B.A.

Previous positions: Finance Director at Alfa-Laval, Procordia, Pharmacia and Net Insight.

Shareholding in Micronic: 0.

Employee stock options: 35,000.

HÅKAN FÄRDIG

Born 1969.

Sr. Vice President, Human Resources.

Education: Degree in organization and management and labor law.

Previous positions: Country HR Manager, GE Healthcare Sverige. HR Manager, Getinge. Country HR Manager, Sun Microsystems.

Shareholding in Micronic 0.

Employee stock options: 35,000.

ROBERT GÖTHNER

Born 1959.

Sr. Vice President, General Manager Sales and Customer Operations, Business Area SMT.

Employed since 2007.

Education: Master's degree and MBA in Engineering and Business administration

Previous positions: Vice President, Marketing and Sales MYDATA automation AB, General Partner at Nordic Venture Partners and InnovationsKapital, and several executive positions with IBM corporation.

Shareholding in Micronic: 0.

Employee stock options: 0.

CHARLES (CHANGHEE) LEE

Born 1957.

Sr. Vice President, Customer Operations, Business Area PG and President of Micronic Laser Systems Korea Co., Ltd.

Employed since 2005.

Education: Electronic Engineer.

Previous positions: Vice President of Taihan Metra Co., Ltd. President of Toshiba Engineering Center Co., Ltd. Service Director of GE Healthcare Korea.

Shareholding in Micronic: 0.

CHARLOTT SAMUELSSON

Born 1963.

Deputy Sr. Vice President, Customer Operations, Business Area PG.

Employed since 1996.

Education: Master's degree in Electronic Physics.

Previous positions: Vice President, System and Application Development at Micronic and Vice President, Business Development at Micronic.

Shareholding in Micronic: 6,000.

Employee stock options: 35,000.

STAFFAN ZETTERSTRÖM

Born 1970.

Sr. Vice President, Operations.

Employed since: 2009.

Education: Master of science

Previous positions: Ericsson, Managing director own consultancy firm

Shareholding in Micronic: 0.

Employee stock options: 0.

JOHAN ÅMAN

Born 1968.

Sr. Vice President, Product Management and Research & Development.

Employed since 1996.

Education: Master's degree in Engineering Physics.

Previous positions: Vice President and General Manager, Business Unit Display. Vice President System and Application Development at Micronic.

Shareholding in Micronic: 903.

Employee stock options: 35,000.

MICRONIC ANNUAL REPORT 2009

Executive management

Carl-Johan Blomberg

Johan Åman

Robert Göthner

Peter Uddfors

Charles (Changhee) Lee

Charlotte Samuelsson

Håkan Färdig

Staffan Zetterström

MICRONIC ANNUAL REPORT 2009 33

FINANCIAL OVERVIEW

SEK million	2009	2009^{1)}	2008	2008^{2)}	2007	2006	2005	2004
Order intake	631	854	378	970	634	604	1,306	945
Profit and loss accounts
Net sales	828.9	1,051.9	568.6	1,193.9	523.0	1,204.1	1,275.8	839.5
Operating profit	-145.8	-179.1	-37.5	-131.6	-290.8	122.6	172.4	125.5
Net financial items	-2.0	-2.8	1.9	1.9	3.3	3.7	-6.6	-5.2
Profit/loss before tax	-147.8	-181.9	-35.5	-129.6	-287.5	126.2	165.8	120.3
Tax	3.7	12.4	4.9	29.7	80.0	-33.3	-48.4	-11.9
Profit/loss for the year	-144.1	-169.5	-30.6	-99.9	-207.5	92.9	117.4	108.4
where of amortization on intangible assets on business combinations	-22.2	-6.5	-	-25.5
Statements of financial position
Non-current assets	472.7		341.5	570.6	413.4	482.8	606.1	718.0
where of intangible assets on business combinations	117.1	107.4	-	113.8
Inventories	341.0		309.7	431.3	333.6	353.3	357.7	339.3
Other receivables	318.1		353.8	487.0	309.0	245.8	345.1	208.3
Cash and cash equivalents	276.6		371.4	392.4	450.7	627.8	561.9	306.2
Total assets	1,408.4		1,376.4	1,881.3	1,506.7	1,709.7	1,870.8	1,571.8
Equity	1,047.2		888.6	1 213.2	907.5	1,109.8	1,025.3	907.9
Interest-bearing liabilities	18.7		163.3	163.6	246.5	295.7	359.8	383.7
Other liabilities	342.5		324.7	504.6	352.7	304.2	485.7	280.2
Total equity and liabilities	1,408.4		1,376.6	1,881.3	1,506.7	1,709.7	1,870.8	1,571.8
Capital employed	1,065.9		1,051.9	1,376.7	1,154.0	1,405.5	1,385.1	1,291.6
Net interest-bearing debt	-257.8		-208.1	-228.9	-204.2	-332.1	-202.1	77.5
Capital turnover rate, times	0.8		0.5	0.9	0.4	0.9	1.0	0.7
Cash flow and liquidity
Cash flow from operating activities	81.6		-105.8		-77.3	219.0	323.5	-11.0
Cash flow from investing activities	-0.5		124.5		-44.6	-97.4	-40.3	-137.6
Cash flow after investing activities, before financing	81.1		18.7		-121.9	121.6	283.2	-148.6
Cash flow from financing activities	-172.9		-102.2		-54.4	-50.9	-29.0	-131.6
Key ratios
Gross margin, %	39.5	40.0	28.4	28.9	29.3	54.3	54.4	55.8
Operating margin, %	-17.6	-17.0	-6.6	-11.0	-55.6	10.2	13.5	15.0
Adjusted operating margin, %	-10.1	-10.1	-15.0	-14.2	-40.2	18.2	22.3	5.2
Profit margin, %	-17.8	-17.3	-6.2	-10.9	-55.0	10.5	13.0	14.3
Equity/assets ratio, %	74.4		64.6	64.5	60.2	64.9	54.8	57.8
Return on capital employed, %	-13.3		-2.2	-9.3	-21.6	9.8	13.3	11.5
Return on equity, %	-14.9		-3.4	-9.4	-20.6	8.7	12.2	12.7

1) The pro forma figures are presented in order to illustrate how an acquisition at January 1, 2008 would have affected the Group's profit and financial position. Pro forma figures are demonstrated when relevant. See page 47 for pro forma details.

COMMENTS ON THE CONSOLIDATED FINANCIAL OVERVIEW

Profit and loss accounts

Micronic is a supplier of manufacturing equipment to the electronics industry and is steered by these companies' investment plans. Since July 2, 2009, the Group includes the acquired MYDATA. Since 1999 Micronic Laser Systems has delivered systems for both display and semiconductor applications. MYDATA delivers surface mounting equipment to the semiconductor market. Sales in the pattern generator business area can fluctuate dramatically between individual periods in response to the available capacity in each market. The Group's sales of after market products and services are rising successively in both relative and absolute terms in pace with the growing number of installed systems on the market and due to widening of the product and service range.

To a large extent, gross margin is affected by both volumes and the product mix. In years with lower volumes, gross margin is negatively affected by the relatively large impact of fixed costs for the production unit and by indirect production-related costs such as the write-down of component inventories, which took place in 2008 and 2009. Gross margin for 2009 was 40 percent, but adjusted for one-time items was 45 percent.

34 MICRONIC ANNUAL REPORT 2009

Financial overview

SEK million	2009	2009^{1)}	2008	2008^{2)}	2007	2006	2005	2004
R&D
R&D expenditure	186.7	257.7	197.3	307.8	198.4	221.7	198.7	258.5
R&D expenses	249.1	341.0	149.6	269.4	279.0	318.5	310.9	176.4
R&D expense/sales, %	30.1	32.4	26.3	22.6	53.3	26.5	24.4	21.0
R&D expenditure/sales, %	22.5	24.5	34.7	25.8	37.9	18.4	15.6	30.8
Capitalized development costs	1.4	3.0	71.9	86.4	34.1	32.4	17.0	117.6
Amortization of capitalized development costs	63.8	87.8	24.2	2.8	114.7	129.2	129.2	35.5
Data per share
Number of shares at end of year, millions	65.3		39.2		39.2	39.2	39.2	39.2
Average number of shares, millions	52.3		39.2		39.2	39.2	39.2	39.2
Average number of shares after dilution, millions	52.3		39.2		39.2	39.2	39.3	40.2
Share price at December 31, SEK	14.30		5.80		32.20	77.00	113.00	66.75
Dividend per share, SEK	–		–		–	–	–	–
Before dilution
Earnings per share (average number of shares), SEK	–2.76		–0.78		–5.30	2.37	3.00	2.77
Equity per share (average number of shares), SEK	20.00		22.69		23.17	28.34	26.18	23.18
Cash flow per share (average number of shares), SEK	–1.76		–2.13		–4.50	1.81	6.49	–7.15
P/E-ratio (number of shares at end of year)	neg		neg		neg	32	38	24
Price/equity ratio (number of shares at end of year), SEK	0.89		0.26		1.39	2.72	4.32	2.88
After dilution
Earnings per share (average number of shares), SEK	–2.76		–0.78		–5.30	2.37	2.99	2.70
Equity per share (average number of shares), SEK	20.00		22.69		23.17	28.34	26.10	22.58
Cash flow per share (average number of shares), SEK	–1.76		–2.13		–4.50	1.81	6.47	–6.97
P/E-ratio (number of shares at end of year)	neg		neg		neg	32	38	24
Price/equity ratio (number of shares at end of year), SEK	0.89		0.26		1.39	2.72	4.32	2.89

So far, the Group's long-term goal has been to achieve an operating margin of over 15 percent, a financial target that Micronic met in 2005 and 2006 when consolidated sales exceeded SEK 1 billion. The Group's R&D expenses are high and utilize a large share of sales revenues. The Group's R&D expenses consist partly of pure expenses and partly of amortization of previously capitalized development costs. Over the past six-year period, average annual R&D expenditure has amounted to SEK 210 million annually, while reported annual expenditure has amounted to SEK 247 million annually. Since 2002 the company has capitalized development costs of SEK 578 million in accordance with the applicable accounting rules. As of 2004 Micronic recognizes amortization of previously capitalized development costs as a development cost and has amortized a total of SEK 497 million over the past six years. Since 2008 aggressive measures have been taken to reduce the Group's total costs, a process that has continued following the merger with MYDATA in 2009. The full effects of these cost-cutting measures are expected to emerge in 2011. The Group's capitalized development costs for the Sigma project were fully amortized at year-end 2007. In 2009 Micronic completed development of the Prevision-10 and began amortizing development costs attributable to the Prevision-10 project.

Capital expenditure and financing

In the past six years the Group has invested a total of approximately SEK 410 million, of which SEK 274 million refers to capitalized development projects. The remaining investments refer mainly to the property in Täby, which was sold in 2008, as well as manufacturing machinery, computers and equipment. The property sale generated a gain of SEK 95 million after repayment of property-related loans.

In 2003 Micronic carried out a rights issue that provided net proceeds of SEK 316 million. The motive for the share issue was to finance R&D activities, mainly with a focus on semiconductor applications. The Group has also previously financed its operations through a convertible debenture loan from ASML amounting to SEK 320 million, which was repaid in 2004. The same year, Micronic received an advance on future royalties from ASML in accordance with an agreement regarding certain collaborative development. The amount of the advance was EUR 20 million, all of which had been repaid at year-end 2009. In connection with repayment of the advance, Micronic regained the full right to utilize all patents relating to SLM on its own account. In 2009 Micronic acquired MYDATA through a non-cash issue. The effect on cash flow was approximately SEK 16 million and referred to transaction costs. The MYDATA cash and cash equivalents amounted to SEK 23 million.

MICRONIC ANNUAL REPORT 2009

REPORT OF THE DIRECTORS

The board of directors and the CEO of Micronic Laser Systems AB (publ) corp. ID. no. 556351-2374, domiciled in Täby, Sweden, hereby present the annual report and consolidated financial statements for the financial year from January 1, 2009 to December 31, 2009. Micronic's formal financial report consists of the following profit and loss accounts, balance sheets, risk information, specifications of changes in equity, cash flow statements and notes.

Issuance

The information in this annual report is subject to the disclosure requirements of Micronic Laser Systems AB in accordance with the Swedish Securities Market Act. Micronic has published an interim report for the fourth quarter and the full year 2009 through a press release issued at 8:00 a.m. on January 28, 2010, and on the corporate website www.micronic.se. The full annual report has also been published through a press release and on the website at 9:00 a.m. on March 19, 2010.

Operations

Micronic is a Swedish high-tech company engaged in the development, manufacturing and marketing of a series of extremely accurate pattern generators for the production of photomasks and advanced surface mount technology (SMT) equipment for flexible electronics production. Operations are conducted in two business areas, pattern generators (PG) and SMT equipment. Micronic's pattern generators are used by the world's leading electronics companies in the manufacture of television and computer displays, semiconductor circuits and semiconductor packaging components. The photomasks functions as templates and are critical enablers for the mass production of displays and semiconductor components. The SMT equipment is used for surface mounting of electronic components on PCBs and stencil-free jet printing of solder paste on PCBs.

The Micronic share has been listed on the stock exchange since March 2000 and since April 2008 on NASDAQ OMX Nordic Exchange, Stockholm List, Small Cap, Information Technology.

Acquisition

On July 2, 2009, Micronic acquired MYDATA automation AB and its subsidiaries. The acquisition was carried out through a non-cash issue to the shareholders in MYDATA. Micronic's share capital was increased by 26,111,057 shares to a total of 65,277,673 shares. After the issue, Skanditek holds 38 percent of the shares in Micronic. The shares in MYDATA have been recorded at a value of approximately SEK 320 million, which includes transaction costs. The new group that has been formed through the merger has the potential to develop into a major supplier to the electronics industry, with a wider product offering. Since the acquisition, a process has been underway to integrate the two companies in order to achieve lower costs, broader expertise and higher efficiency, and thereby also improved financial stability.

Group structure

The Group consists of the Parent Company, Micronic Laser Systems AB with wholly owned subsidiaries in Japan, South Korea, Taiwan and the USA and a Swedish treasury company, as well as the subsidiary MYDATA automation AB with its subsidiaries in China, France, Germany, Japan, the Netherlands, Singapore, the UK, South Korea, Taiwan, and the USA and a Swedish treasury company.

The Group's R&D, manufacturing and marketing activities are conducted mainly in Micronic Laser Systems AB and MYDATA automation AB. The subsidiaries in the PG business area are responsible for service and customer support. In the SMT business area, the subsidiaries are responsible for both sales and customer support.

The Group's operations are organized in two business areas, pattern generators (PG) and SMT equipment (SMT). Certain functions, such as R&D, production, purchasing and administration, are conducted jointly for both business areas, while functions for product management, marketing, and sales are found in each business area.

Board and executive management

The extraordinary general meeting on July 2, 2009, resolved on the acquisition of MYDATA automation AB. At the EGM, Rune Glavare was elected as Chairman, Lena Treschow Torell as Vice Chairman and Magnus Lindquist, Göran Malm, Åke Svensson and Patrik Tigerschiöld as regular members. On November 23, Peter Uddfors took over as President and CEO. In December 2009 a decision was made to introduce a new organization, which has among other things involved changes in the executive management. Sven Löfquist was President and CEO until November 23, 2009. Sven has been employed in the company since 1985 and was President and CEO from 2001. For information about the current executive management, see pages 32–33.

Employees

The average number of employees in the Group during 2009 was 613 (398), of whom 400 (285) work in Sweden. Women make up 17 percent (17) of the average number of employees in the Group. Employee turnover in 2009 was 13 percent (15). The number of employees at year-end was 581 (384). At the end of 2009, a number of employees in the Swedish operations were given notice of redundancy.

One third of the Group's employees work in R&D.

The aims for human resource activities in 2009 were to continue implementing processes for employee development, to increase clarity by documenting and tying the individual employees' goals to Micronic's business objectives and to globalize the company through greater interplay between the various group units. After the acquisition of MYDATA, human resource activities have been focused mainly on harmonizing the terms of employment. In 2010 Micronic will continue its efforts to harmonize the conditions for employees in the two business areas. Other goals for 2010 are to implement a talent development program and start the formulation of new values for the new group. For a more detailed description of how Micronic sees its role as employer, see the section on Employees, Environment and Quality on pages 22–23.

The Group's environmental work

As a manufacturing company, Micronic has no significant environmental impact. Micronic's production unit is not subject to permit requirements from the environmental authorities, but only a reporting requirement for the use of coolants (HFC) in the company's air conditioning system. Nor is Micronic subject to the EU directive on producer responsibility for Waste Electrical and Electronic Equipment (WEEE) or restrictions on the use of hazardous substances (RoHS). Despite this, Micronic works with a long-term goal to minimize any environmental impact caused by the company. The Group's greatest environmental impact factors are energy consumption, purchasing of materials, chemicals and services, transports and the use of developer fluids and other chemicals. Micronic's environmental policy is based on a commitment to promoting an environmentally sustainable society. To meet this goal, Micronic has formulated a number of objectives. Micronic strives to conduct its operations in the most resource- and energy-efficient manner possible. The products developed by Micronic should give rise to a minimum of environmental impact throughout their life cycle. Micronic inspires and encourage its external business partners to comply with and respect international environmental laws and regulations.

MICRONIC ANNUAL REPORT 2009

Micronic's most significant environmental impact is found in the energy area. Among other things, efforts in 2009 have been focused on the development of routines for handling customer returns in an environmentally sound manner. The result of this work is that 100 percent of a pattern generator can now by sorted into different fractions and recycled. Measures to improve energy-efficiency will continue in 2010. For a more detailed description of Micronic's environmental, OHS and quality work, see the section on Employees, Environment and Quality on pages on pages 22–23.

Key events in 2009

Micronic Laser Systems AB acquired MYDATA automation AB through a non-cash issue. Peter Ufddfors was appointed as President and CEO. Micronic received an order for a Prevision-8 system from an Asian display manufacturer. ASML terminated its license agreement, meaning that Micronic has regained the right to fully utilize all patents related to the SLM technology on its own account. Micronic has refunded an advance payment of EUR 13 million for future royalties from ASML.

Financial overview

Consolidated net sales for 2009 amounted to SEK 829 million (569). This figure includes the PG business area for the full year 2009 and the SMT business areas for the second half of 2009. The market has remained weak in both business areas. The financial reports in the following financial statements and notes reflect the actual conditions in 2009 but also include pro forma statements to illustrate Micronic's results and financial position as if these operations had been merged as of January 1, 2008. For these pro forma statements and comments, see page 40 and onward.

Research and development

R&D expenses in 2009 totaled SEK 251 million (150). Actual R&D expenditure during the year was SEK 187 million (197). Aside from these R&D expenses, the operating loss includes SEK 64 million (24) in amortization of previously capitalized development costs. In 2009 new development projects were capitalized in an amount of SEK 1 million (72). For a more detailed description of the Group's R&D activities in 2009 and for financial comments, see the sections on the respective business areas and the financial information on pages 40 and onward.

Corporate governance

Micronic applies the Swedish Code of Corporate Governance. For a detailed description of the company's corporate governance practices, see the Corporate Governance Report on pages 24–29.

Risks and risk management

Through its operations Micronic is exposed to risks of both an operating and financial nature. For a description of the company's identified risks and procedures for risk management, see pages 39–41.

Public tender offers

Micronic has a total of 65,277,673 shares outstanding, all of the same class. Each share grants the right to one vote. There are no limitations on the transferability of shares owing to provisions in the Articles of Association. The company has one shareholder, Skanditek, which had a holding of 10 percent or more at year-end 2009. There are employees with private shareholdings in the company, although not the employees as a whole through a pension fund or similar. To the company's knowledge, there are no agreements between shareholders giving rise to limitations in the right to transfer shares. Furthermore, the company is not party to any agreement that will have effect, be altered or cease to apply if control over the company should change as a result of a public tender offer.

According to the Articles of Association, the members of the board of directors are appointed yearly by the AGM. The Articles of Association do not contain any restrictions regarding the appointment or dismissal of board members or regarding amendments to the Articles of Association. Instead, all other decisions are made in compliance with the Swedish Companies Act. There are no agreements between the company and members of the board or employees granting the right to remuneration if these individuals resign voluntarily, if their employment is terminated without reasonable grounds or they are terminated as a result of a public tender offer, other than those presented below. Agreements between the company and senior executives are described below. The two foreign subsidiary presidents who are not members of the executive management team are covered by agreements providing termination benefits for six or twelve months in the event of dismissal by the company.

Proposal to the 2010 AGM regarding guidelines for remuneration to senior executives

Recommendations for remuneration to senior executives are prepared by the remuneration committee and put before the board of directors for decision. The principles will be adopted by the AGM on April 12, 2010.

The proposed guidelines for remuneration to senior executives include the CEO and the individuals who together with the CEO make up the executive management team. For a presentation of the executive management, see pages 32–33 and Note 13 on pages 60–63.

In handling matters regarding remuneration to senior executives, external advice is sought when necessary. The main principle is to offer senior executives market-based remuneration and terms of employment. Actual levels of remuneration are determined on the basis of factors such as expertise, experience and performance. The total remuneration package consists of fixed basic salary, variable salary, employee stock options, pension benefits and other benefits. The fixed basic salary is subject to yearly review. Variable salary is based on a performance targets for the company as a whole and is payable on the attainment of business targets for the individual employee or unit. The maximum amount of variable remuneration is equivalent to 50 percent of basic salary. Senior executives are entitled to a company car and health insurance. Senior executives in Micronic Laser Systems AB have been awarded employee stock options according to the conditions for the employee stock option program 2007/2012.

The contractual retirement age for the CEO and other senior executives is 65 years. All pension benefits for senior executives are of the defined contribution type, which means that the company pays an individually contracted defined contribution pension premium and has no further legal or constructive obligations.

The most recently approved guidelines for remuneration to senior executives are presented in Note 13.

The board may deviate from these guidelines in individual cases when there is special reason to do so.

Information about agreements for termination benefits

The employment contract with the CEO specifies a notice period of nine months in the event of dismissal by the company. In the event of dismissal from his duties, the CEO is entitled to remuneration during the notice period and termination benefits corresponding to 12 months' salary. The employment contract with the CFO specifies a notice period of nine months in the event of dismissal by the company, in which case he is also entitled to termination benefits corresponding to 12 months' salary after the period of notice. For other senior executives employed in Sweden there is a notice period of six months in the event of dismissal by the company, with termination benefits equal to six months' salary. The agreement for the president of the South Korean subsidiary, who is also a member of the executive management team, grants entitlement to termination benefits corresponding to two months for each year of service. The employment contract, with related benefits, is valid during the notice period. In cases where termination benefits are received, no other benefits are payable.

Key events after the end of 2009

After the end of the financial year, no events have taken place in the Micronic Group which have had, or is expected to have, a significant financial impact on the company.

MICRONIC ANNUAL REPORT 2009

Outlook for 2010

In response to trends in the display industry, photomasks are growing increasingly complex to manufacture, which is expected to create a need for more advanced pattern generators. At the same time, competition between photomask makers has intensified, resulting in downward pressure on sales prices for photomasks. This price erosion has caused the majority of photomask makers to postpone investments in new and more advanced systems. However, growing volumes for G7-G8 and higher capacity utilization in already installed pattern generators indicate a need for increased capacity.

Pro forma sales for 2009 amounted to just over SEK 1 billion. It is the Board's assessment that total sales in 2010 will exceed this level somewhat.

For the proposed disposition of accumulated deficit, see page 79.

MICRONIC ANNUAL REPORT 2009

RISKS AND RISK MANAGEMENT

Micronic's risks and risk management

Through its operations, the Group, consisting of the Parent Company and the group subsidiaries, is exposed to risks of both an operating and financial nature which the Group itself can influence to a greater or lesser extent.

The company uses an ongoing process to identify all existing risks and assess how these should be managed. Through development of processes, risk management and through the Group's insurance solutions, Micronic minimizes its total risk and therefore also the cost of risk management. Costs that can be eliminated through loss prevention measures include penalties, repairs or discounts to customers as a consequence of damage, quality flaws and delays in delivery.

With efficient and secure processes it is possible to shorten the manufacturing time, leading to lower production costs. In addition, the cost of the Group's insurance solutions can be decreased in that efficient processes lead to reduced losses. Micronic's processes, including those in the risk management area, are continuously assessed among other things through supplier evaluations.

Operating risks

Market development/business cycle

To a large extent, the Group's sales are influenced by investments in the electronics industry. In the short term the company's operations, profitability and financial position could be affected by continued limited investment in the industry. These risks could be further magnified by the generally turbulent financial situation that is causing a weak market.

To reduce the negative effects of the market down cycle, Micronic has expanded its product offering to address a wider range of application areas. A downturn for certain applications can then be offset by growing demand for other applications and therefore increased revenue in other product areas.

Micronic is also developing its offering of peripheral equipment and other after market services in order to reduce its dependency on direct system sales. With a rising number of systems in operation at customer sites, there is a growing market for service and add-on sales.

Political risks

Although most of Micronic's production and development take place in Sweden, the majority of customers in the Pattern Generator (PG) business area are based in Asia, with an emphasis on Japan, South Korea, Taiwan and to a certain extent also China. In the Surface Mount Technology equipment (SMT) business area, the majority of customers are found in Europe, North America and to a lesser extent Asia. Micronic has subsidiaries in China, France, Germany, Japan, the Netherlands, Singapore, South Korea, Taiwan, the UK and the USA. The subsidiaries offer sales of SMT equipment, service, customer support and after market products and assist the Parent Company with sales of pattern generators.

At present, the countries where Micronic operates are not deemed to represent any significant political risks.

Customers

Because there are a limited number of captive and commercial photomask manufacturers in the world, sales of pattern generators represent a concentration of customer risk. A continued low order intake from, or sales to, an individual customer can have a significant impact on the Group's profit and financial position in the short term. Earnings for a specific period can also be affected by the postponement in the date of shipment for individual pattern generators. The trend for pattern generators is moving toward fewer but larger individual orders, which can lead to a longer sales cycle.

The sales volume for SMT equipment is larger, expressed in the number of units. The market in this business area also consists of many different types of customers, both contract and original equipment manufacturers in the electronics industry. The products' application areas are also suited to a number of different industries. This diversified customer base results in a low dependency on individual customers. On the other hand, the SMT business area is more exposed to competition since there are multiple equipment suppliers, of which certain are large and have considerably greater resources for product development.

Development

Due to the rapid pace of technological development in the areas where the Group is active, it is vital that the products are delivered at the specified time. The Group is also exposed to development risk, consisting of the risk that research and development activities will not lead to new and profitable business opportunities to the intended extent or the risk that the cost of developing a solution will be difficult to predict.

Micronic strives to minimize these risks by investing aggressively in technological innovation and through close collaboration with its customers and the sales organization in development of new products and accessories.

Micronic has a strong local presence through its subsidiaries and can provide a very high level of service.

Suppliers

Some of the components used in manufacturing of the Group's products are sold by a limited number of suppliers. Micronic works continuously to evaluate alternative suppliers of these critical components.

Product liability and intellectual property

Through its business operations Micronic is subject to normal product liability, which means that personal injury and property damage caused by Micronic's pattern generators and SMT equipment to a customer or third party could lead to claims against Micronic. For risks of this type, Micronic has taken out normal insurance, whereby the level of risk is deemed limited.

Micronic's success is also dependent on the Group's ability to protect its business secrets. Micronic utilizes various methods to protect confidential information. To reduce the risks related to intellectual property, Micronic works continuously to protect the use of innovative new technology through patents and license agreements.

By applying a proactive strategy for early identification and protection of innovations through patent applications, combined with analysis of the intellectual property potential of various products, the company minimizes its vulnerability.

Property risks

Through its operations, which include production and development, Micronic is exposed to traditional property risks such as fire and water damage, theft, crimes against property, etc., that could lead to serious disruptions in operations. The Group has insurance coverage for damage of this type, such as business interruption insurance and property insurance. With regard to the property in Täby, certain of these insurance policies are held by the property owner.

Micronic also pursues active loss prevention, among other things with regard to building service systems and processes, for example by providing all employees with fire safety training and carrying out regular fire drills. Micronic has prepared a Business Continuity Plan (BCP) to ensure fast action and limitation of losses in the event of a disaster. The BCP contains action plans for different scenarios. Micronic has customary board, directors' and officers' liability coverage for all companies in the Group.

MICRONIC ANNUAL REPORT 2009
39

40
MICRONIC ANNUAL REPORT 2009

Integration risks

The acquisition of MYDATA is expected to lead to positive synergy effects. The process of integrating the companies and identifying these synergies is underway. However, acquisitions are associated with risks related to integration of the various units. These risks, like unforeseen events connected to the acquisition, could cause the positive effects to be delayed or fail to materialize.

Financial risks

Financial risks arise due to fluctuations in the Group's profit and cash flows resulting from movements in exchange rates, interest rates, credit risks and borrowing risks. To regulate its handling of financial risks, there is a finance policy that provides a framework of guidelines and rules for financial risk management. The policy is adopted by the board and revised annually.

The Group's finance operations are aimed at securing the Group's financing as cost-effectively as possible and minimizing the negative effects of rapid exchange rate fluctuations on reported profit and cash flow. The Group's finance operations are carried out mainly in the Parent Company's finance department.

Foreign exchange risk

Sales of pattern generators consist of a relatively limited number of systems with typically long delivery times, i.e. the period between order receipt and delivery, in contrast to SMT equipment which has a significantly shorter delivery time. Service is mainly provided and invoiced locally by the subsidiaries. Most of the Group's costs are incurred in SEK.

Micronic's largest single financial risk is foreign exchange risk, since the Group's sales are denominated almost exclusively in foreign currencies (see table). Pattern generators are sold primarily in US-dollars and Japanese yen and SMT equipment primarily in US-dollars and euros, while services are also invoiced in other currencies, primarily Korean won in the PG business area.

The average exchange rates for the Japanese yen and US-dollar rose sharply in 2009, by 28 and 16 percent, respectively, compared to the average rates in 2008. In a comparison between the closing day rates for 2009 to 2008, however, the yen fell by 9 percent and the US dollar by 7 percent. For both currencies, the closing day rates are below the average exchange rates for 2009. The average euro rate climbed by 11 percent during 2009, while the closing day rate was lower than that in 2008. The Korean won rate changed marginally during 2009.

If sales for 2009 in the PG business area were translated at the average exchange rates in 2008 (without consideration to forward exchange contracts), sales revenue would have been approximately SEK 80 million lower. Sales revenue for 2009 was positively affected in an amount of approximately SEK 6 million as a result of the forward exchange contracts in force.

Foreign exchange risk can be classified partly as translation exposure arising in connection with the translation of the financial statements of foreign subsidiaries, and partly as transaction exposure. Forward exchange contracts and loans/investments are used to reduce exposure in foreign currency. That portion of capital employed in the foreign subsidiaries that is financed through loans is financed in local currency.

In order to minimize transaction exposure in the sale of pattern generators, the company uses forward exchange contracts to hedge contracted cash flows. Contracted flows consist of orders received. The hedged percentage of a contracted cash flow depends on the degree of uncertainty regarding the date of delivery.

As the delivery date approaches, Micronic increases the hedged portion of the respective contracted inflows for pattern generators. Neither forecasted flows that are not covered by underlying orders nor translation exposure are hedged. Given the income and expense volumes in 2009, the effect of a 10 percent change in the average rate of exchange for the JPY, USD, EUR and KRW against the Swedish krona would affect operating profit in the PG business area in an amount of approximately SEK 48 million. Equity would be affected in the same amount after tax expenses.

INCOME AND EXPENSES BY CURRENCY 2009, PG BUSINESS AREA

Currency	% of income	% of expenses	Average rate in 2009	Average rate in 2008	Rate at year-end 2009	Rate at year-end 2008
JPY	57	12	0.0818	0.0640	0.0785	0.0860
USD	31	11	7.6457	6.5808	7.2125	7.7525
KRW	12	6	0.0060	0.00602	0.00620	0.00613
EUR	0	5	10.6213	9.6055	10.3530	10.9355
SEK	0	66

INCOME AND EXPENSES BY CURRENCY 2009, SMT BUSINESS AREA

Currency	% of income	% of expenses	Average rate in 2009	Average rate in 2008	Rate at year-end 2009	Rate at year-end 2008
USD	44	11	7.6457	6.5808	7.2125	7.7525
EUR	43	16	10.6213	9.6055	10.3530	10.9355
GBP	6	2	11.9260	12.0912	11.4850	11.2475
JPY	2	2	0.0818	0.0640	0.0785	0.0860
SEK	5	67	1.0000	1.0000	1.0000	1.0000
OTHER	0	2

In the sale of SMT equipment, the corresponding transaction exposure is managed through the sale of foreign exchange contracts corresponding a certain share of forecasted revenue flows in EUR and USD. Currency hedging is undertaken in accordance with the board's established finance policy. Operating profit for 2009 (12 months) was positively affected in an amount of approximately SEK 11 million as a result of the forward exchange contracts in force. Given the income and expense volumes in 2009, the effect of a 10 percent change in the average rate of exchange for the JPY, USD, GBP or EUR against the Swedish krona would affect operating profit in the SMT business area by an amount of approximately SEK 27 million. Equity would be affected in the same amount after tax expenses.

For the Group, movements in foreign exchange rates have a significantly greater impact on income than expenses, since two thirds of the expenses in both the PG and SMT business area are incurred in SEK while the absolute bulk of revenue is denominated in foreign currency.

Interest risk

Micronic is exposed to interest risk, albeit to a very limited extent. Interest risk is defined as the risk for changes in the yield on fixed-income instruments arising from changes in market interest rate and the related cash flow risk since higher interest rates also lead to an increased cash outflow, as well as the risk that the Group's financing costs will increase as a result of lower assessed creditworthiness.

Interest risk is limited since investments are made in accordance with liquidity plans, meaning that investments may be held to maturity but with the limitation that no investment may have a horizon of more than six months. No investments were made in risk-bearing paper during 2009. The Group has only a small number of loans related to operations in the foreign subsidiaries. Consequently, interest risk arising from the Group's financial liabilities is limited. Interest risk is decreasing both due to low volumes and as a result of generally lower interest rates. Financial instruments are not used to hedge the effects of negative changes in market interest rates. The Group's loans are covered by agreements with both variable and fixed interest. Note 28 contains a specification of interest terms on the Group's loans.

MICRONIC ANNUAL REPORT 2009
41

Credit risk

Through its operations Micronic is also exposed to credit risk. Credit risk is divided into risks arising from customer sales and related derivative transactions, as well as risks associated with liquidity management.

The sale of goods or services gives rise to customer credit risk, meaning a risk that the Group's customers will be unable to meet their payment obligations. Micronic sells a relatively small number of pattern generators to a limited number of customers, primarily in Asia, which represents a concentration of credit risk in the PG business area. These customers are major producers of photomasks for whom Micronic's pattern generators make up a small part of a larger manufacturing facility. The customers are typically well-known, have been established in the market for many years and have historically good credit ratings. Because the number of suppliers of manufacturing equipment is also limited, Micronic has longstanding business relationships with its customers.

In the sale of SMT equipment, credit risk is limited in that it is spread between a large number of customers in different industries. However, the customers are often smaller players. Partly to minimize credit risk, Micronic is working intensively to as far as possible obtain advance financing for all or parts of orders from customers.

When doing business with new customers or in new geographical areas, Micronic minimizes credit risk by requiring letters of credit or other forms of collateral. In addition, Micronic has historically had very low credit losses.

One type of credit risk is so called counterparty risk, defined as the risk that a counterparty, a financial institution, will be unable to live up to its contractual obligations on the settlement date. Micronic enters into derivative transactions only with Sweden's largest banks.

The Group's liquidity is found primarily in the Parent Company. Investments are made in financial instruments with high credit ratings or in banks. At year-end 2009 all liquidity was placed in banks.

Liquidity risk

The Group invests its excess liquidity without assuming any significant liquidity risk, i.e. according to the established policy Micronic invests its excess liquidity in bank deposits or other highly liquid fixed-income instruments. The reason for this is that it must be possible to liquidate investments at short notice in order to minimize the liquidity risk associated with them. No investments in fixed-income securities were made during 2009. The Group's financial assets and liabilities are presented in Note 36.

Micronic monitors liquidity in the Parent Company and the Group by continuously preparing both short- and long-term liquidity forecasts as a basis for decision on any borrowing or investments. These liquidity forecasts, which among other things are updated with information about anticipated incoming payments from the sale of pattern generators, also provide a basis for increasing the hedged portion of contracted flows as the date of delivery approaches.

GROUP

CONSOLIDATED PROFIT AND LOSS ACCOUNT

SEK thousand	Notes	2009	2008
Net sales	7	828,896	568,617
Cost of goods sold	5	-501,398	-407,154
Gross profit		327,498	161,463
Other operating income	11	13,666	121,567
Research and development expenses	12	-251,409	-149,644
Selling expenses		-75,525	-52,853
Administrative expenses		-112,553	-96,382
Other operating expenses	5, 11	-47,512	-21,611
Operating profit/loss	5	-145,835	-37,460
Financial income		4,884	13,320
Financial expenses		-6,835	-11,377
Net financial items	15	1,951	1,943
Profit/loss before tax		-147,786	-35,517
Tax	18	3,693	4,872
Profit/loss for the year		-144,093	-30,645
Earnings per share, before and after dilution, SEK		-2.21	-0.78
Average number of shares before and after dilution, thousands		65,278	39,167

STATEMENT OF COMPREHENSIVE INCOME

SEK thousand	2009	2008
Profit/loss for the year	-144,093	-30,645
Other comprehensive income
Translation differences for the year	-8,051	16,457
Tax relating to translation differences	-187	-2,349
Recognized in hedge reserve	-	-7,629
Transferred to profit and loss	3,805	-1,788
Tax relating to items recognized in hedge reserve	-1,001	2,572
Other comprehensive income for the year	-5,434	7,264
Total comprehensive income for the year	-149,527	-23,381

COMMENTS ON THE CONSOLIDATED PROFIT AND LOSS ACCOUNT

Order intake and order backlog

Order intake for 2009 amounted to SEK 631 million (378) and consisted of orders for pattern generators, SMT equipment, service and after market sales.

The order intake for pattern generators included 2 systems (3), of which 1 (0) for display manufacturing, 0 (2) for semiconductor applications and 1 (1) for applications in electronic packaging.

The order backlog at December 31, 2009, amounted to SEK 42 million (224) and consisted of pattern generators for a total value of SEK 7 million (224) and SMT equipment including after market orders for a total value of SEK 35 million.

Sales

Net sales for 2009 reached SEK 829 million (569), of which SEK 230 million (334) referred to the fourth quarter.

These sales include deliveries of three pattern generators, SMT equipment, service and after market sales. Of total sales, SEK 579 million is related to pattern generators and SEK 250 million is related to SMT equipment in the second half of the year.

Total sales of pattern generators in 2009 amounted to SEK 312 million (331) and consisted of 2 systems (1) for display manufacturing, 0 systems (2) for semiconductor applications and 1 system (0) for applications in electronic packaging.

All pattern generators that were shipped in 2009 were delivered to customers in Asia, compared to 2008 when customers in Asia accounted for 81 percent and customers in the USA for 19 percent.

Operating expenses and gross profit

The cost of goods sold in 2009 totaled SEK 501 million (407). Gross profit for the full year was SEK 328 million (161), which is equal to a gross margin of 40 percent (28). Gross margin for the fourth quarter was 21 percent (37).

Gross profit has been charged with SEK 19 million in amortization of excess values in inventories and the order backlog that were identified in connection with the acquisition of MYDATA. Gross margin is affected to a large degree by the number and mix of systems delivered, which can have a significant effect on gross margin for individual quarters. Gross profit is also charged with direct costs for delivered goods and services, including estimated costs for system setup at the customer site and estimated costs for the warrantee period. Aside from these direct costs, gross profit is charged with certain fixed costs for the production department.

42 MICRONIC ANNUAL REPORT 2009

Gross profit for the fourth quarter of 2009 included costs for a write-down of SMT equipment inventories and comparable costs of SEK 12 million, as well as costs of SEK 15 million for the write-down of inventories related to pattern generators. In 2008 a corresponding write-down of SEK 67 million was made in inventories of pattern generator components. Adjusted for amortization of excess values in inventories and the order backlog, as well as the write-down of inventories related to pattern generators and SMT equipment, gross margin for the full year was 45 percent.

Research and development in 2009

Operating profit for 2009 was charged with R&D expenses of SEK 251 million (150).

Actual R&D expenditure during the year was SEK 187 million (197), of which SEK 1 million has been capitalized and refers to development in the SMT business area. Capitalization in 2008 amounted to SEK 72 million, all of which referred to development of the Prevision-10 pattern generator. Previously capitalized development costs were amortized in an amount of SEK 64 million (24), most of which is attributable to development of the Prevision-10.

Amortization of development costs for the Prevision-10 was started in 2009 in connection with shipment of the first system. As a result of this accounting practice, reported development costs have risen by SEK 110 million compared to the previous year despite the fact that actual expenditure has decreased by SEK 10 million.

In connection with the acquisition of MYDATA, Micronic has identified excess values in intangible assets, such as technology, that will be amortized over a period of five years. Amortization of technology is recognized as a development cost and amounted to SEK 2 million in 2009. See Note 12.

Each development project is assessed individually to determine whether the criteria for capitalization have been met. Amortization of capitalized costs is started when a development project is completed, at which time it begins to generate revenue.

In the PG business area, R&D in 2009 was concentrated on completion of the Prevision-10 and predevelopment activities for LDI.

Efforts in the SMT business area have been focused mainly on further development of the new generations of MY100 and MY500, partly through capacity enhancements and updating of software.

For more details about R&D activities in 2009, see the descriptions under the respective business area.

Selling and administrative expenses

Selling expenses in 2009 are reported at SEK 76 (53) million. Of total selling expenses, SEK 16 million (9) consisted of sales commissions.

Administrative expenses in 2009 amounted to SEK 113 million (96), and included product management expenses of SEK 37 million (38).

Administrative expenses for 2009 also included costs of SEK 2 million (4) for Micronic Laser Systems AB's ongoing employee stock option program. The program runs until 2012 and the total costs are estimated at just over SEK 11 million.

Profit for 2009 was charged with costs of SEK 2 million for the employee stock option program, which means that Micronic has recognized total costs of approximately SEK 11 million for the program since 2007. The entire cost, which has been recorded as an administrative expense, will be fully recognized at the end of the first quarter of 2010.

Other income and expenses

Other income and expenses in 2009 totaled SEK -34 million (100), of which SEK -40 million (95) referred to the fourth quarter.

In 2009 Micronic recognized restructuring charges of SEK 42 million (15). In connection with the integration of operations in Micronic and MYDATA, the company has identified synergies that will among other things lead to a staff reduction. In 2008 the sale of the property in Täby generated a capital gain of approximately SEK 98 million.

Operating profit

The consolidated operating loss for 2009 was SEK 146 million (-37). Operating profit for both 2008 and 2009 has been affected by individual items that complicate comparability between years. 2009 was a year of major changes for the Micronic Group. The acquisition of MYDATA and the integration process following thereafter has had a considerable impact on the Group's reported earnings for 2009.

The consolidated loss for the year includes amortization of excess values attributable to the acquisition in an amount of SEK 22 million.

An additional consequence of the acquisition and ongoing integration between the companies is that earnings have been charged with restructuring costs. A reorganization has led to the appointment of a new CEO and changes in group management. A staff reduction has been decided and is now underway. One of the motives for the acquisition of MYDATA was synergies, which have been identified and costs for these were recognized in 2009.

The Group's results are significantly affected by reporting of research and development costs. Unlike 2008, no major development projects were capitalized in 2009, although amortization was started on projects that were capitalized through the end of 2008. The net sum of this reporting has had a negative effect of SEK -110 million on operating profit in a comparison between 2008 and 2009. The above items are also illustrated in Note 5.

Tax

The consolidated loss before tax for 2009 was SEK 148 million (-36). The Group's total tax effect was SEK 4 million (5). Of total reported tax, approximately SEK -8 million (-4) consists of current tax on profit for the year arising in the foreign subsidiaries while the remainder consists of deferred tax.

The loss before tax in the Parent Company for 2009 was SEK 98 million (-81). The loss before tax in MYDATA automation AB was SEK 105 million.

The difference in the pre-tax loss between the Group and the two companies Micronic Laser Systems AB and MYDATA automation AB respectively, is largely explained by the fact that development costs are reported as incurred in the respective company, while certain development costs in the Group are capitalized in the balance sheet to be later expensed as amortization.

Starting in the fourth quarter of 2009, Micronic Laser Systems AB has ceased to capitalize new loss carryforwards. MYDATA automation AB, on the other hand, has capitalized loss carryforwards for all of 2009.

At year-end 2009 Micronic Laser Systems AB had closing accumulated loss carryforwards of approximately SEK 410 million, but in the balance sheet had capitalized a tax asset corresponding to accumulated loss carryforwards of SEK 288 million.

Profit for the year and earnings per share

The consolidated loss after tax for 2009 was SEK 144 million (-31).

The total number of shares outstanding at December 31, 2009, was 65,277,673. Earnings per share, basic and diluted, calculated on the number of shares at the end of the year were SEK -2.21 (-0.78). Earnings per share, basic and diluted, calculated on the average number of shares were SEK -2.76 (-0.78).

The average reported number of shares has not been affected by any dilutive effects from the employee stock option program 2007/2012, since the market price is considerably lower than the strike prices in the option program. However, the average number of shares has been affected by the new share issue carried out in connection with the acquisition of MYDATA.

MICRONIC ANNUAL REPORT 2009
43

QUARTERLY ORDER INTAKE

QUARTERLY SALES

GROSS MARGIN ROLLING 12 MONTHS

QUARTERLY R&D EXPENSES

COMMENTS ON THE STATEMENTS OF FINANCIAL POSITION AND CASH FLOW

Assets

The Group's total assets at the end of 2009 amounted to SEK 1,408 million, compared to total assets of SEK 1,376 million at year-end 2008.

The Group's non-current assets totaled SEK 473 million (342). Intangible assets have increased by SEK 125 million and amounted to SEK 252 million (127). Most of this item, SEK 154 million (125), consists of capitalized development costs. In 2009 Micronic capitalized no new development projects in the pattern generator business area, compared to capitalization of SEK 72 million in 2008. Previously capitalized development costs in the SMT equipment business area were added through the acquisition of MYDATA. In connection with the acquisition, excess values have been identified in the form of brands, customer relationships and goodwill, items that are recognized as intangible assets.

Previously capitalized development costs were amortized in an amount of SEK 64 million (24). Added to this was approximately SEK 2 million in amortization of excess values. The increase in amortization is explained by the fact that amortization of previously capitalized development costs for the Prevision-10 pattern generator was started in 2009. Each development project is assessed individually to determine whether the criteria for capitalization have been met. The value of intangible assets is reviewed for impairment quarterly to ensure accurate reporting. The value of brand and goodwill, which were identified on the acquisition of MYDATA, will be reviewed yearly in a similar manner.

The year's capital expenditure on tangible assets totaled approximately SEK 6 million (11), while depreciation of tangible assets amounted to around SEK 30 million (48).

Trade receivables at year-end 2009 totaled SEK 165 million (207).

Cash and cash equivalents fell by SEK 92 million in 2009 and amounted to SEK 277 million (371) at the end of the year.

Liabilities

The Group's interest-bearing liabilities decreased during 2009, mainly due to the repayment of an advance on future royalties from ASML of SEK 142 million. The Group's current operating liabilities have fallen somewhat, from SEK 295 million to SEK 290 million. The Group's trade payables have increased from SEK 20 million to SEK 65 million, while advance payments from customers have decreased by SEK 100 million to SEK 10 million.

Equity

On July 2, 2009, Micronic acquired MYDATA automation AB through a non-cash issue. Micronic's share capital has thus increased by 26,111,057 shares to a total of 65,277,673 shares. The share capital after the acquisition amounts to SEK 65,278 million. Transaction costs amounted to approximately SEK 16 million, of which around SEK 9 million has been recognized against equity. In addition, equity has been charged with costs of approximately SEK 2 million for the employee stock option program in Micronic Laser Systems AB.

Cash flow, capital expenditure and financing

The Group's cash and cash equivalents at December 31, 2009, amounted to SEK 277 million (371), which means that the consolidated cash flow for the year was negative at SEK 92 million (83).

Operating activities in 2009 generated a positive cash flow of SEK 82 million, compared to a negative cash flow of SEK 106 million in 2008. Investing activities during the year generated a negative cash flow of SEK 7 million, compared to SEK 83 million in 2008. Development costs of SEK 72 million were capitalized in 2008.

The acquisition of MYDATA was carried out through a non-cash issue that generated no cash flow. Costs attributable to the acquisition amounted to SEK 16 million at the same time that net cash was increased by SEK 22 million.

Financing activities generated a negative cash flow of SEK 173 million (102) that is attributable to the refund of an advance on future royalties from ASML of SEK 142 million. The MYDATA group has reduced its external borrowing after the acquisition date and net borrowing in the Group has otherwise decreased.

The equity/assets ratio at year-end was 74 percent (65).

MICRONIC ANNUAL REPORT 2009

GROUP

STATEMENT OF CASH FLOWS

SEK thousand	Notes	2009	2008
Operating activities
Profit/loss before tax		-147,786	-35,517
Adjustments for non-cash items
Depreciation/amortization and impairment of assets		117,061	72,467
Capital gain on the sale of non-current assets		24	-97,113
Unrealized foreign exchange differences		-15,964	-6,971
Provisions for employee benefits		1,182	23
Other provisions		-779	-150
Other non-cash items		40,831	103,485
Paid income tax		-8,365	-2,095
		-13,796	34,129
Cash flow from changes in working capital
Inventories		50,963	-16,123
Trade receivables		150,171	61,214
Other receivables		20,986	-122,793
Trade payables		4,740	-24,203
Other liabilities		-131,488	-38,027
Cash flow from operating activities		81,576	-105,803
Investing activities
Investments in subsidiaries		6,417	-
Investments in intangible assets	19	-3,377	-71,886
Investments in tangible assets	20	-4,005	-11,311
Sale of tangible assets	20	464	207,663
Cash flow from investing activities		-501	124,466
Financing activities
Repayment of debt		-172,895	-102,159
Cash flow from financing activities		-172,895	-102,159
The year's cash flow		-91,820	-83,496
Cash and cash equivalents at beginning of year		371,384	450,662
Exchange rate differences in cash and cash equivalents		-2,978	4,218
Cash and cash equivalents at end of year		276,586	371,384
Interest received and paid
Interest received		4,677	13,460
Interest paid		-9,945	-10,433
		-5,269	3,027
Other non-cash items
Write-down of inventory and similar items		27,877	76,179
Provisions for restructuring		25,648	11,225
Changes in provisions for setup, warranty and commissions		-15,019	6,897
Changes in provisions for variable salary		401	4,692
Costs for the employee stock option program		1,924	4,492
		40,832	103,485

STATEMENT OF FINANCIAL POSITION

SEK thousand	Notes	Dec 31,2009	Dec 31,2008
ASSETS
Intangible assets	19	252,266	126,804
Tangible assets	20	59,059	85,904
Non-current receivables	23	37,800	38,051
Deferred tax assets	18	123,548	90,779
Total non-current assets		472,673	341,538
Inventories	24	341,046	309,702
Tax receivables		6,387	2,128
Trade receivables	35	165,004	206,892
Prepaid expenses and accrued income	26	106,551	136,549
Other receivables	25	40,175	8,234
Cash and cash equivalents		276,586	371,384
Total current assets		935,749	1,034,889
TOTAL ASSETS		1,408,422	1,376,427
EQUITY AND LIABILITIES
Equity
Share capital		65,278	39,167
Other contributed capital		1,135,470	855,400
Reserves		-3,937	1,498
Retained earnings incl. profit/loss for the year		-149,657	-7,489
Total equity		1,047,154	888,576
Liabilities
Non-current interest-bearing liabilities	28	3,926	148,077
Non-current provisions	29	8,285	7,719
Deferred tax liabilities	18	44,141	22,021
Total non-current liabilities		56,352	177,817
Current interest-bearing liabilities	28	14,823	15,177
Advance from customers		9,112	99,580
Trade payables		64,860	20,178
Tax liabilities		5,594	5,277
Other liabilities	30	18,063	22,363
Accrued expenses and deferred income	31	172,052	128,607
Warranty provisions	32	20,412	18,852
Total current liabilities		304,916	310,034
Total liabilities		361,268	487,851
TOTAL EQUITY AND LIABILITIES		1,408,422	1,376,427

MICRONIC ANNUAL REPORT 2009

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

The share capital consists of 65,277,673 (39,166,616) shares. The shares are of the same class and each share carries one vote.

SEK thousand	Share capital	Other contributed capital	Reserves		Retained earnings	Total equity
			Hedge reserve	Translation reserve
Opening balance, January 1, 2008	39,167	855,400	4,041	-9,807	18,663	907,464
Profit/loss for the year					-30,645	-30,645
Other comprehensive income
Translation differences for the year				16,457		16,457
Tax relating to translation differences				-2,349		-2,349
Recognized in hedge reserve			-7,629			-7,629
Transferred to profit/loss			-1,788			-1,788
Tax relating to items recognized in hedge reserve			2,572			2,572
Total other comprehensive income			-6,845	14,108	-	7,264
Total income and expenses recognized in equity, excl. transactions with owners			-6,845	14,108	-30,645	-23,380
Equity-settled share-based payments according to IFRS 2					4,492	4,492
Closing balance, December 31, 2008	39,167	855,400	-2,804	4,301	-7,489	888,576
Profit/loss for the year					-144,093	-144,093
Other comprehensive income
Translation differences for the year				-8,051		-8,051
Tax relating to translation differences				-187		-187
Transferred to profit/loss			3,805			3,805
Tax relating to items recognized in hedge reserve			-1,001			-1,001
Total other comprehensive income			2,804	-8,238	-	-5,434
Total income and expenses recognized in equity, excl. transactions with owners			2,804	-8,238	-144,093	-149,527
Non-cash issue	26,111	287,222				313,333
Costs related to non-cash issue		-7,152				-7,152
Equity-settled share-based payments according to IFRS 2					1,924	1,924
Closing balance, December 31, 2008	65,278	1,135,470	-	-3,937	-149,657	1,047,154

The translation reserve contains exchange differences arising on translation of foreign operations after January 1, 2004.

46 MICRONIC ANNUAL REPORT 2009

PRO FORMA ACCOUNTS

The pro forma accounts refer to the full years 2008 and 2009.

The accounts are presented in order to illustrate how an acquisition at January 1, 2008, would have affected the Group's profit and financial position. In preparation of the pro forma accounts, profit for each year has been charged with one year's amortization of amortizable excess value in intangible assets. In the pro forma accounts, the excess values attributed to inventories and order backlog have been amortized in full during 2008 and are therefore not charged to the pro forma accounts for 2009. This leads to a difference between the pro forma accounts and the actual accounts for 2009.

The presented pro forma accounts for 2008 have been adjusted compared to the corresponding pro forma accounts that were presented in the acquisition prospectus. The adjustment has been made because the cost of acquisition used in the prospectus was an estimated value based on the share price on the publication date of the prospectus.

PRO FORMA PROFIT AND LOSS

SEK thousand	2009	2008
Net sales	1,051,881	1,193,854
Cost of goods sold	-630,800	-848,327
Gross profit	421,081	345,527
Other operating income	-	145,658
Research and development expenses	-303,088	-274,011
Selling expenses	-120,942	-158,480
Administrative expenses	-128,760	-124,055
Other operating expenses	-47,368	-66,204
Operating profit/loss	-179,077	-131,565
Result from financial investments	-2,755	1,923
Profit/loss before tax	-181,832	-129,642
Tax	12,394	29,731
Profit/loss for the year	-169,438	-99,911

PRO FORMA STATEMENT OF FINANCIAL POSITION

SEK thousand	Dec 31, 2008
ASSETS
Capitalized development costs	224,119
Other intangible assets	1,636
Brand	20,000
Customer relationships	11,143
Order backlog	0
Goodwill	64,344
Tangible assets	93,580
Non-current receivables	46,341
Deferred tax assets	109,417
Total non-current assets	570,580
Inventories	431,270
Current receivables	487,029
Cash and cash equivalents	392,437
Total current receivables	1,310,736
TOTAL ASSETS	1,881,316

EQUITY AND LIABILITIES

Equity	1,213,178
Liabilities
Non-current interest-bearing liabilities	148,077
Other non-current liabilities	8,705
Deferred tax liabilities	48,957
Total non-current liabilities	205,739
Current interest-bearing liabilities	15,479
Other current liabilities	446,920
Total current liabilities	462,399
Total liabilities	668,138
TOTAL EQUITY AND LIABILITIES	1,881,316

MICRONIC ANNUAL REPORT 2009

PARENT COMPANY

PROFIT AND LOSS ACCOUNT

SEK thousand	Notes	2009	2008
Net sales	7	405,225	433,395
Cost of goods sold	5	-222,702	-304,038
Gross profit		182,523	129,357
Research and development expenses	12	-156,631	-200,720
Selling expenses		-31,257	-84,477
Administrative expenses		-82,710	-40,726
Other operating income	11	1,281	127,733
Other operating expenses	11	-21,352	-21,258
Operating profit/loss	5	-108,146	-90,091
Result from financial investments
Interest income and similar items	16	11,875	14,198
Interest expenses and similar items	16	-1,472	-10,183
Profit/loss after financial items		-97,743	-86,076
Appropriations	27	-	5,451
Profit/loss before tax		-97,743	-80,625
Tax	18	-7,020	15,114
Profit/loss for the year		-104,763	-65,511

CASH FLOW STATEMENT

SEK thousand	Notes	2009	2008
Operating activities
Profit/loss after financial items		-97,743	-86,076
Adjustments for non-cash items
depreciation/amortization and impairment		28,174	44,025
Unrealized foreign exchange differences		-	19,006
Capital gains on the sale of non-current assets		47	-97,113
Other non-cash items		13,190	89,927
Paid income tax		-54	-
Cash flow from operating activities before changes in working capital		-56,386	-30,231
Changes in working capital
Inventories		28,514	-26,774
Trade receivables		133,614	-9,785
Other receivables		35,081	-74,129
Trade payables		3,861	-22,835
Other liabilities		-90,836	-33,616
Cash flow from operating activities		53,848	-197,370
Investing activities
Investments in subsidiaries		-37,789	-
Investments in intangible assets	19	-1,964	-
Investments in tangible assets	20	-2,679	-13,717
Sale of tangible assets	20	27	207,663
Cash flow from investing activities		-42,405	-193,946
Financing activities
Repayment of debt		-142,162	-82,583
Cash flow from financing activities		-142,162	-82,583
The year's cash flow		-130,719	-86,007
Cash and cash equivalents at beginning of year		337,739	423,746
Cash and cash equivalents at end of year		207,020	337,739
Additional information
Interest received and paid
Interest received		3,037	13,386
Interest paid		-4,582	-8,672
		-1,545	4,714
Other non-cash items
Write-down of inventory and similar items		18,236	67,770
Provisions for restructuring		7,648	11,225
Changes in reserves for setup, warranty and commissions		-15,019	6,928
Costs for the employee stock option program		1,924	4,492
Changes in provision for variable salary		401	-488
		13,190	89,927

48 MICRONIC ANNUAL REPORT 2009

BALANCE SHEET

SEK thousand	Notes	Dec 31, 2009	Dec 31, 2008
ASSETS
Non-current assets
Intangible assets	19	2,164	1,636
Tangible assets	20	47,581	78,894
Financial assets
Participations in group companies	21	345,296	24,677
Receivables from group companies	22	29,401	33,507
Other non-current receivables	23	27,680	29,880
Deferred tax receivables	18	81,616	85,424
Total financial assets		483,993	173,488
Total non-current assets		533,738	254,018
Current assets
Inventories	24	222,835	262,005
Current receivables
Trade receivables		28,262	161,576
Receivables from group companies		21,614	9,332
Other receivables	25	7,047	8,027
Tax assets		1,220	1,166
Prepaid expenses and accrued income	26	107,126	129,416
Total current receivables		165,269	309,517
Cash and cash equivalents		207,020	337,739
Total current assets		595,124	909,261
TOTAL ASSETS		1,128,862	1,163,279
Pledged assets and contingent liabilities
At December 31
Pledged assets	33	89,000	89,000
Contingent liabilities	34	4,141	98,420
SEK thousand	Notes	Dec 31, 2009	Dec 31, 2008
---	---	---	---
EQUITY AND LIABILITIES
Restricted equity
Share capital		65,278	39,167
Statutory reserve		1,141,707	861,637
		1,206,985	900,804
Non-restricted equity
Fair value reserve		630	2,481
Accumulated deficit		-116,318	-52,731
Profit/loss for the year		-104,763	-65,511
		-220,451	-115,761
Total equity		986,534	785,042
Non-current liabilities
Other interest-bearing liabilities	28	-	142,162
Total non-current liabilities		-	142,162
Current liabilities
Advance from customers		6,258	83,864
Trade payables		19,135	15,174
Liabilities to group companies		3,167	-
Other liabilities	30	3,413	4,046
Accrued expenses and deferred income	31	97,500	114,139
Warranty provisions	32	12,855	18,852
Total current liabilities		142,328	236,075
TOTAL EQUITY AND LIABILITIES		1,128,862	1,163,279

COMMENTS ON THE PARENT COMPANY PROFIT AND LOSS ACCOUNT AND BALANCE SHEET

Micronic Laser Systems AB is the Parent Company of the Micronic Group.

The Parent Company's net sales for 2009 are reported at SEK 405 million (433). Net sales in the Parent Company consist of sales of pattern generators and to a lesser degree also after market services. The majority of after market services are delivered and invoiced locally by subsidiaries.

The operating loss was SEK 108 million (-90).

In the Parent company, all R&D is expensed as incurred. The Parent Company does not capitalize any development costs in the balance sheet as intangible assets, for which reason no amortization of previously capitalized development costs is recorded in the Parent Company. The intangible assets found in the Parent Company consist of business systems and licenses. This explains the large differences in reported development costs between the Group and the Parent Company.

The loss before tax in the Parent Company for 2009 was SEK 98 million (-81). The difference in the pre-tax loss between the Group and the Parent Company is largely explained by differences in the methods for reporting development costs, see above.

Starting in the fourth quarter of 2009, the Parent Company has ceased to capitalize new loss carryforwards. At year-end 2009 the Parent Company showed closing accumulated loss carryforwards of approximately SEK 410 million, but in the balance sheet had capitalized a tax asset corresponding to accumulated loss carryforwards of SEK 288 million.

The Parent Company's cash and cash equivalents at the end of 2009 totaled SEK 207 million, compared to SEK 338 million at year-end 2008. The Parent Company's cash flow was thus negative at SEK 131 million. Operating activities contributed a positive cash flow of SEK 54 million, compared to a negative cash flow of SEK 197 million in 2008. Capital expenditure on property, plant and equipment in 2009 amounted to SEK 5 million (14). The acquisition of MYDATA was carried out through a non-cash issue that generated no cash flow. However, the Parent Company has recognized transaction costs of SEK 16 million connected to the acquisition. The subsidiary MYDATA automation AB has borrowed SEK 20 million from the Parent Company. Financing activities generated a negative cash flow of SEK 142 million that is attributable to the refund of an advance on future royalties from ASML.

MICRONIC ANNUAL REPORT 2009

PARENT COMPANY STATEMENT OF CHANGES IN EQUITY

The share capital consists of 65,277,673 (39,166,616) shares. The share are of the same class and each share carries one vote.

SEK thousand	Restricted equity		Non-restricted equity		Total equity
	Share capital	Statutory reserve	Fair value reserve¹⁾	Accumulated deficit incl. loss for the year
Opening balance, January 1, 2008	39,167	861,637	-4,144	-57,224	839,436
Translation differences recognized directly in equity			9,122		9,122
Tax attributable to items recognized directly in equity			-2,497		-2,497
Total income and expenses recognized directly in equity, excl. transactions with owners			6,625		6,625
Profit/loss for the year				-65,511	-65,511
Total income and expenses recognized, excl. transactions with owners			6,625	-65,511	-58,886
Equity-settled share based payments according to IFRS 2				4,492	4,492
Closing balance, December 31, 2008	39,167	861,637	2,481	-118,243	785,042
Translation differences recognized directly in equity			-2,512		-2,512
Tax attributable to items recognized directly in equity			661		661
Total income and expenses recognized directly in equity, excl. transactions with owners			-1,851		-1,851
Profit/loss for the year				-104,763	-104,763
Total income and expenses recognized, excl. transactions with owners			-1,851	-104,763	-106,614
Non-cash issue	26,111	287,222			313,333
Costs related to non-cash issue		-7,152			-7,152
Equity-settled share based payments according to IFRS 2				1,924	1,924
Closing balance, December 31, 2009	65,278	1,141,707	630	-221,081	986,534

¹⁾ The fair value reserve in its entirely comprises the translation reserve.

50 MICRONIC ANNUAL REPORT 2009

FINANCIAL REPORT

ADDITIONAL INFORMATION AND NOTES

NOTE 1. ACCOUNTING POLICIES, GENERAL INFORMATION

Compliance with norms and laws

Micronic Laser Systems AB (publ) and its subsidiaries, together comprising the Group, are engaged in the development, manufacture and sale of advanced pattern generators for the production of photomasks and advanced equipment for surface mounting of electronic components. All development and manufacturing takes place in Sweden, while sales are generated almost exclusively outside Sweden. The subsidiaries are based in China, France, Germany, Japan, the Netherlands, Singapore, South Korea, Taiwan, the UK and the US. In addition, there are a large number of distributors and agents worldwide.

The Parent Company is quoted on NASDAQ OMX, Stockholm, in the category Small Cap, Information Technology. The consolidated annual report has been prepared in accordance with International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) and the interpretations of these issued by the International Financial Reporting Interpretations Committee (IFRIC) as endorsed by the European Commission for application in the EU. Furthermore, the Swedish Financial Reporting Board's recommendation RFR 1, Supplementary Accounting Rules for Groups, is applied. The accounting policies of the Group are the same as those applied in the preceding year with the exception of the changes specified below. The following new and revised standards that have been issued by the IASB and endorsed for application in the EU as of 2009 have an effect on the Group's financial reports. Since January 1, 2009, the Group applies the revised IAS 1, IAS 23, IFRS 7 and IFRS 8.

As a result of revisions to IAS 1, Presentation of Financial Statements, income and expenses that were previously recognized directly in equity are now instead recognized in other comprehensive income, which the Group presents in a separate report called the statement of comprehensive income directly following the profit and loss account. The Group has chosen to apply the new report titles introduced in IAS 1 – statement of comprehensive income, statement of financial position, statement of changes in equity and statement of cash flows. All comparative information in the annual report has been changed in accordance with the new presentation. Since the changes affect only presentation, no amounts have been changed with respect to earnings per share or other items in the financial statements.

Revisions to IAS 23, Borrowing Costs, require the Group to capitalize borrowing costs in the historical cost of qualifying assets for which the commencement date for capitalization is on or after January 1, 2009. Previously, borrowing costs were recognized as an expense in the period in which they were incurred instead of being capitalized. The change has not had any impact on Micronic, which has no loans of significant size.

Following the acquisition of MYDATA, the implementation of IFRS 8, Operating Segments, has given rise to reporting of two operating segments, pattern generators and SMT equipment.

The revised IFRS 7, Financial Instruments: Disclosures, primarily introduces new disclosure requirements for financial instruments measured at fair value in the statement of financial position. The instruments are classified in a three-level fair value hierarchy that reflects the significance of the inputs used for measurement. The division into levels determines which disclosures are required about the instruments; where level 3 with the lowest quality inputs requires more disclosures than the other levels. These disclosure requirements have primarily affected Note 36.

The IASB has adopted new and/or revised IFRSs and interpretations that will be introduced in future years. A revised IFRS 3, Business Combinations, and a revised IAS 27, Consolidated and Separate Financial Statements, are mandatory as of 2010. These revisions and changes are not expected to affect Micronic, which has only wholly owned subsidiaries.

IFRS 9, Financial Instruments, is intended to replace IAS 39, Financial Instruments: Recognition and Measurement, by 2013 at the latest. The IASB has published the first of at least three parts that will together make up IFRS 9. This first part deals with classification and measurement of financial assets. The categories of financial assets found in IAS 39 have been replaced by two categories, those measured at fair value and those measured at amortized cost. Amortized cost is used for instruments that are held with the intent of collecting the contractual cash flows; representing payments of principal and interest on the principal outstanding. Other financial assets are measured at fair value and the "fair value option" as in IAS 39 is retained. Changes in fair value are recognized in profit or loss, with the exception of value changes on equity instruments that are not held for trading and for which the entity has elected to report value changes in other comprehensive income. Value changes on derivatives treated as hedging instruments are not affected by this part of IFRS 9 but are reported in accordance with IAS 39. The company has not decided whether to adopt the new standards early or with effect from 2013.

The following amendments to accounting standards for future application are not expected to have any impact on the Group's financial statements:

Amendments to IAS 24 Related Party Disclosures, mainly regarding disclosures for state-controlled entities, but also the definition of related parties.
Amendments to IAS 32, Financial Instruments: Presentation – Disclosure, regarding classification of equity instruments.
Amendments to IAS 39, Financial Instruments: Recognition and Measurement, regarding items that meet the criteria for hedge accounting.
IFRIC 17 Distributions of Non-cash Assets to Owners.
Annual improvements that are not already applicable, mainly among those published in April 2009.

The Parent Company applies the same accounting policies as in 2008. Any deviations between the policies applied by the Parent Company and the Group are a result of the Swedish Annual Accounts Act's limitations on the scope for IFRS conformity in the Parent Company and of the exemption rules in RFR 2, Accounting for Legal Entities, arising from the connection between accounting and taxation.

Approval

These financial statements for the Parent Company and the Group were approved for publication on February 22, 2010, and will be submitted to the Annual General Meeting for adoption on April 12, 2010.

Basis of valuation

The closing date is December 31.

Assets and liabilities are stated at cost, unless otherwise specified.

The functional currency of the Parent Company is Swedish kronor (SEK), which is also the presentation currency of the Parent Company and the Group. This means that the financial statements are presented in SEK. All amounts are stated in SEK thousands unless otherwise specified.

Accounting estimates and classifications

The preparation of financial reports in compliance with IFRS requires the company's management to make certain accounting judgments, estimates and assumptions that affect the reported amounts of assets and liabilities on the closing date and the reported amounts of revenues and expenses during the reporting period. The actual results may differ from these estimates. The areas that contain a large degree of estimates, which are complex or where the assumptions and estimates are of material significance for the consolidated financial statements are specified in Note 4.

Non-current assets and liabilities essentially consist of amounts that are expected to be recovered or settled more than 12 months after the closing date.

Current assets and current liabilities essentially consist of amounts that are expected to be recovered or settled within 12 months from the closing date. Where applicable, any deviations from these principles for settlement or payment are specified in a note to the affected item in the statement of financial position.

NOTE 2. ACCOUNTING POLICIES OF THE GROUP

Principles of consolidation

Subsidiaries include all companies in which the Parent Company has the ability, directly or indirectly, to govern the operating and financial policies in a manner normally determined by the ownership of more than 50 percent of the voting stock. Subsidiaries are included in the consolidated financial statements from the date on which control passes to the Group and up to the date on which control passes from the Group.

The consolidated financial statements have been prepared in accordance with the purchase method of accounting, whereby the acquisition of a subsidiary is regarded as a transaction in which the Group indirectly acquires the subsidiary's assets and assumes its liabilities and contingent liabilities. To determine the Group's cost of acquisition for the investment in the subsidiary, a purchase price allocation (PPA) is conducted to establish the historical cost of the investment and the fair value, on the date of exchange, of the acquired identifiable assets and assumed liabilities and contingent liabilities. The cost of the acquisition is

MICRONIC ANNUAL REPORT 2009

measured as the aggregate of the fair values, on the date of exchange, of assets given, liabilities incurred or assumed and equity instruments issued in exchange for control of the acquiree, plus any costs directly attributable to the acquisition. In business combinations where the cost of acquisition exceeds the fair value of acquired assets, assumed liabilities and contingent liabilities that are reported separately, the difference is recognized as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in profit or loss.

The financial statements of subsidiaries are included in the consolidated financial statements from the date of acquisition and up to the date on which control passes from the Group.

All intra-group income and expenses, receivables and liabilities, and unrealized gains on transactions between group companies are eliminated in full on consolidation.

Foreign currency translation

Functional currency

Items included in the financial statements of the Group's subsidiaries are measured using the currency of the primary economic environments in which the subsidiary operates (functional currency).

Transactions and balances

Transactions in foreign currency are translated to the functional currency at the rate of exchange ruling on the transaction date.

Sales transactions in foreign currency are translated at the spot rate with the exception of sales of spare parts, for which an approximative exchange rate for the month is used. When a contracted sale is hedged, the cumulative gain or loss on the hedging instrument, normally a forward exchange contract, is recognized in the profit and loss account when the hedged sales transaction affects profit or loss.

Monetary assets and liabilities in foreign currency are translated to the functional currency at the closing day rate. Foreign exchange gains/losses arising on translation are recognized in the profit and loss account. Non-monetary assets and liabilities carried at cost are translated at the rate of exchange ruling on the transaction date. Non-monetary assets and liabilities carried at fair value are translated to the functional currency at the rate of exchange ruling on the date when the fair values were determined. Forward exchange contracts are used to protect assets and liabilities from foreign exchange risk.

Hedge accounting is not applied for offsetting of foreign exchange risk since a financial hedge is reflected in the accounts in that both the underlying asset/liability and the hedging instrument are translated at the closing day rate of exchange while changes in exchange rates are recognized through profit or loss. Foreign exchange differences arising on operating receivables and liabilities are recognized in operating profit, while exchange differences arising on financial assets and liabilities are recognized among financial items.

Financial statements of foreign operations

Assets and liabilities in foreign group companies are translated from that company's functional currency to SEK at the closing day rate of exchange. Revenue and expenses in the respective group company's profit and loss account are translated to SEK at the average rate of exchange that is a reasonable approximation of actual rates on the respective transaction dates. The average rate is calculated on quarterly basis. All exchange differences arising from the translation of foreign operations are recognized in other comprehensive income and are accumulated in a separate translation reserve within consolidated equity.

Net investments in foreign operations

Exchange differences arising on translation of long-term loans that form part of the net investment in a foreign operation are deferred to a translation reserve in equity together with the related tax effects. Investments in foreign subsidiaries are not hedged.

Cumulative translation differences are presented in a separate component of equity and include translation differences arising after the date of transition to IFRS (January 1, 2004). When a foreign operation is disposed of, the cumulative exchange differences relating to that foreign operation are recognized in consolidated profit or loss.

Reporting of operating segments

A business segment is an identified part of the Group that that engages in business activities from which it may earn revenues and incur expenses and for which discrete financial information is available. An operating segment's operating results are reviewed regularly by the entity's chief operating decision maker to make decisions about resources to be allocated to the segment and assess its performance.

Intangible assets

Capitalized costs for business systems

Capitalized costs for business systems are recognized at cost with a deduction for accumulated amortization. The investment in a business system refers to costs incurred for adaptation and implementation of a fully integrated business system and consists of both internally generated and externally acquired assets. Capitalized costs for business systems are amortized straight-line over the expected useful life of the asset, which is three years. Amortization is started when the business system is ready for use.

Costs for maintenance of the business system are expensed as incurred.

Capitalized development costs

Costs related to research undertaken with the prospect of gaining new scientific or technical knowledge in the Group's operations are expensed as incurred.

Development projects where knowledge and understanding gained from research and practical experience are directed towards producing new products, processes or systems are recognized as intangible assets in the statement of financial position when they meet the criteria for capitalization. Development costs may be capitalized if, and only if, the company can demonstrate the technical feasibility of completing the intangible asset, the intention and ability to complete the asset and use or sell it, the probability that the asset will generate future economic benefits, the availability of adequate resources to complete the development and to use or sell the asset and the ability to reliably measure the costs attributable to the asset during its development. The reported value includes all directly attributable costs, such as those for materials, salaries and compensation to employees engaged in R&D activities.

Other development costs are expensed in the profit and loss account for the period in which they arise.

Individual assessment is made of all ongoing research and development projects to determine which costs for the respective project are capitalizable and to look for any indications of impairment.

Amortization of capitalized development costs is started when the respective development project is completed, normally when it begins generating revenue, and is carried out on a straight-line basis over a period of three years for pattern generators and five years for SMT equipment.

License

The license is linked to patent rights in the maskless lithography application area. Amortization of this license was started at the end of 2003 on a straight-line basis over a period of five years based on the expected useful life of the asset.

Goodwill

Goodwill is measured at cost less accumulated impairment losses. Goodwill is attributable to MYDATA automation AB and is tested for impairment at least annually.

Other intangible assets

Other intangible assets consist of brands and customer relationships, and are measured at cost less accumulated amortization and impairment losses. These assets are attributable to the acquisition of MYDATA automation AB.

Tangible assets

Items of property, plant and equipment are measured at capitalized cost less accumulated depreciation. Buildings and land refer to the Group's property and production facility in Täby outside Stockholm, which also contains office premises. The building itself and the related permanent equipment have been divided into a number of components with different expected useful lives. The components defined for the building are frame and foundation, heating and ventilation, exterior and insulation, roofing, elevators, high tension installations and other. Permanent equipment includes permanent modifications to the property, such as cleanroom facilities.

The item "equipment" includes self-produced equipment used primarily for research and development as well as test and training equipment. Until December 31, 2008, borrowing costs attributable to the construction or production of an intangible or tangible asset were not capitalized as part of the cost of that asset, but were expensed in the period in which they were incurred.

Subsequent expenditure is added to the recorded value of an asset or recognized as a separate asset when it is probable that the future economic benefits associated with the asset will flow the Group and the cost of the asset can be measured reliably. All other types of repair and maintenance are expensed in the profit and loss account for the period in which they arise.

Land is not depreciated. Other tangible assets are depreciated on a straight-line basis over their expected useful lives, starting from the month of completion or acquisition as follows:

Building components
Frame and foundation	60 years
Heating and ventilation	30 years
Exterior and insulation	40 years
Roofing	30 years
Elevators	30 years
High tension installations	20 years
Other	15 years

52
MICRONIC ANNUAL REPORT 2009

Other tangible assets
Land improvements 20 years
Cleanroom facilities 10 years
Other permanent equipment 5–40 years
Machinery and equipment 5 years
Computers 3 years

The item "other permanent equipment" is of lesser significance and includes components such as boilers and lightning conductors.

Gains/losses on the sale of tangible assets are calculated as the difference between the net realizable value and carrying amount of the item and are recognized over the profit and loss account among other operating income/expenses.

Property lease

The sold property is leased back through a sale and lease-back arrangement. As a result of the terms of the agreement between the company and the lessor, the property lease is classified as an operating lease. The leasing charge, consisting of a fixed portion and an interest portion, is recognized as a lease expense in the profit and loss account. Variable charges are expense in the periods in which they are incurred.

Leases

Leases for machinery and equipment where the risks and rewards incident to ownership have been substantially transferred to the Group are classified as finance leases. Assets held through finance leases are reported in the consolidated statement of financial position as non-current assets and are depreciated according to the same principles as other tangible assets. The corresponding obligation to pay future leasing charges is reported in the statement of financial position under interest-bearing liabilities. The lease expense is reported in the consolidated profit and loss account within depreciation and interest expenses. Each lease payment is divided between amortization of the lease liability and interest expense according to the annuity principle. Other leases are classified as operating leases. In these cases, the lease expense is reported within operating expenses, although not depreciation, in the profit and loss account.

Financial instruments

The financial assets recognized in the statement of financial position include cash and cash equivalents, trade receivables and derivatives. Financial liabilities and equity include trade payables, loans payable and derivatives.

Recognition and derecognition from the statement of financial position

A financial asset or liability is recognized in the statement of financial position when the company initially becomes party to the contractual provisions of the instrument. Trade receivables are recorded in the statement of financial position when an invoice has been sent. Financial liabilities are recognized when the counterparty has performed and there is contractual obligation to pay, even if no invoice has been received. Trade payables are recorded when an invoice has been received.

A financial asset is derecognized from the statement of financial position when the company's rights under the agreement are realized, expire or the company has relinquished control of the asset. The same applies to a part of a financial asset. A financial liability is derecognized from the statement of financial position when the obligation specified in the agreement is discharged or otherwise extinguished. The same applies to a part of a financial liability.

A financial asset and a financial liability are set off and netted in the statement of financial position only when a legal right of setoff exists and there is an intent and ability to set off and net these items or to simultaneously realize the asset and settle the liability.

The regular way purchase or sale of a financial asset is recognized on the trade date, which is the date on which the company commits to purchase or sell the asset.

Classification and valuation

Non-derivative financial instruments are initially measured at cost, corresponding to fair value including transaction costs for all financial assets and liabilities not carried at fair value through profit or loss, which are measured at fair value less transaction costs.

The fair value of a listed financial asset is equal to the asset's quoted market price on the closing date. The Group has no such assets. The fair value of unlisted financial assets is established by using valuation techniques.

On initial recognition, a financial instrument is classified based on the intent for acquisition of the financial instrument. Subsequent measurement depends on how the instruments have been classified upon initial recognition.

Micronic uses the following categories:

Financial assets at fair value through profit or loss

This category consists of two subgroups – financial assets held for trading and other financial assets which the company has designated to this category on initial recognition. Assets in this category are subsequently measured at fair value with fair value changes in profit or loss. A financial asset is classified as held for trading when it is acquired for the purpose of selling in the short term. Derivatives are classified as held for trading except when used for hedging. Derivatives are classified as held for trading when hedge accounting has been discontinued. For financial assets other than those held for trading, the company has chosen not to classify these as financial assets at fair value through profit or loss (fair value option).

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted on an active market. These are included in current assets, with the exception of items maturing more than 12 months from the closing date which are classified as non-current assets. Assets in this category are recognized at amortized cost. "Trade receivables" and "other receivables" in the statement of financial position belong to the category "loans and receivables". Cash and cash equivalents are also included in this category.

Financial liabilities at fair value through profit or loss

This category consists of financial liabilities held for trading and derivatives not designated as hedging instruments. Liabilities in this category are subsequently measured at fair value and changes in fair value are recognized in the profit and loss account. A financial liability is classified as held for trading when it is acquired for the purpose of selling in the short term. Derivatives are classified as held for trading when hedge accounting is discontinued. For financial liabilities other than those held for trading, the company has chosen not to classify these financial liabilities at fair value through profit or loss.

Other financial liabilities

Financial liabilities not held for trading are measured at amortized cost less transaction costs. This category includes the Group's loans payable, finance lease liabilities and trade payables.

Derivatives used for hedging purposes

All derivatives are measured at fair value in the statement of financial position. Changes in the fair value of derivatives designated as fair value hedges are recognized in profit or loss. Changes in the fair value of derivatives designated as cash flow hedges and hedges of net investments in foreign currency are recognized in other comprehensive income and cumulative changes are deferred to a special reserve in equity, the hedge reserve or translation reserve, until the hedged item is recognized in profit or loss.

Reporting of derivatives and hedges

Derivatives consist of forward exchange contracts that are entered into to reduce transaction exposure in foreign currencies and are not used for speculative purposes. Derivatives are recognized in the statement of financial position and are measured at fair value. The method for reporting gains/losses arising on changes in the fair value of a derivative depends on whether the derivative has been identified as a hedge instrument and, in such case, the nature of the hedged risk. In hedge accounting, the Group identifies derivatives as:

a hedge of the exposure to changes in the fair value of a recognized asset or liability or a previously unrecognized firm commitment (fair value hedge)
a hedge of the exposure to variability in cash flows attributable to a highly probable forecast transaction or the hedge of foreign exchange risk in a firm commitment (cash flow hedge)
a hedge of a net investment in a foreign operation.

At present, only cash flow hedges are used.

When a contract is entered into, the relationship between the hedge instrument and the hedged risk is formally documented, including the company's risk management objective and strategy for undertaking the hedge. The Group also documents its assessments, both at the inception of a hedge and at each reporting date, on the effectiveness of the derivatives used in the hedge transaction in offsetting changes in the fair value or cash flows of the hedged item.

Changes in the hedge reserve in equity are recognized in other comprehensive income.

In the Group, derivatives used to hedge probable future commercial inflows in foreign currency are reported according to the rules for hedge accounting for cash flow hedges. This means that the effective portion of fair value changes on derivative instruments is recognized in a hedge reserve in other comprehensive income. The gain or loss attributable to the ineffective portion is recognized immediately in the profit and loss account. The fair value of derivatives is measured as the quoted market prices of currencies and interest rates at the end of the reporting period.

Amounts accumulated in equity are reclassified to profit or loss when the hedged item is reflected in profit or loss, i.e. upon revenue recognition.

When a hedge instrument expires, is sold or no longer meets the hedge accounting criteria and the cumulative gains/losses are deferred in equity, these gains/losses are retained in equity and are recycled to profit or loss when the

MICRONIC ANNUAL REPORT 2009

forecast transaction is recognized in the profit and loss account. The effective portion is recognized in net sales when the hedged item affects profit or loss, while the ineffective portion is recognized in other operating income/expense. When a forecast transaction is no longer expected to occur, the cumulative gains/losses deferred in equity are immediately released to the profit and loss account among other operating income/expense.

Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and at bank or equivalent institutions and other highly liquid short-term investments that have original maturities of less than three months and are not subject to any material risk for value fluctuations.

The Group had no short-term investments during the financial year.

Trade receivables

Trade receivables are classified as part of the category "loans and receivables". Trade receivables are stated at the amount in which they are expected to be received after deduction of probable credit losses, which are assessed individually. Trade payables have a short expected term and are stated at the nominal amount without discounting. Write-downs of trade receivables are recorded in operating expenses.

Inventories

Inventories are stated at the lower of cost and net realizable value. Inventories are carried at cost calculated on a First-in, First-out (FIFO) basis and include all costs of purchase, costs of conversion and other costs incurred in bringing the goods to their existing location and condition. Self-produced finished and semi-finished goods are valued at direct production cost including a reasonable share of indirect manufacturing overheads. Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make a sale.

Impairment

The carrying amounts of the Group's assets are reviewed at the end of each reporting period to look for any indication that an asset may be impaired.

Impairment testing of tangible and intangible assets and participations in group companies

If there is an indication of impairment, the asset's recoverable amount is calculated. For goodwill and other intangible assets with indefinite useful lives, the recoverable value is calculated annually for the smallest identifiable cash-generating unit to which the asset belongs. The recoverable amount is the higher of fair value less costs to sell and value in use. In measuring value in use, a discount rate is used that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses are recognized in the profit and loss account. Impairment testing according to the above is carried out for all tangible and intangible assets, including intangible assets not yet available for use.

Impairment testing of financial assets

A review is carried out at the end of each reporting period to look for any indication that a financial asset may be impaired. Indicators of impairment may arise from adverse changes in circumstances that affect the ability to recover an asset's carrying amount or parts of it, such as assessment of trade receivables. The recoverable amount of financial assets carried at amortized cost is measured as the present value of future cash flows discounted at the effective interest rate on initial recognition of the asset. Assets with a short time to maturity are not discounted in calculation of recoverable value. Impairment losses are recognized in the profit and loss account.

Taxation

Current tax refers to tax payable on the year's taxable profit and adjustments in current tax from earlier periods. Deferred tax refers to the tax calculated partly on the basis of temporary differences and partly on taxable deficits. Total tax consists of current tax and deferred tax. Unlike deferred tax, current tax requires immediate payment. Current and deferred tax are reported over the profit and loss account unless the tax refers to items recognized directly in other comprehensive income or equity.

In the Group, deferred tax is calculated according to the balance sheet method on the basis of temporary differences between the carrying amount of an asset or liability and its tax base. Deferred tax receivables are recognized to the extent that they are expected to be used against future taxable profits.

Employee benefits

Pension commitments

Pension commitments are normally fulfilled through payment of premiums according to a defined contribution pension plan. These are charged to the profit and loss account for the period in which the employees render the related service.

Other long-term employee benefits

In the Japanese subsidiary, there is a minor long-term employee benefit obligation. When employment ceases, through termination or retirement, the accumulated amount of benefit is paid out immediately.

Termination benefits

A provision is recognized on the termination of employees only when the company is demonstrably committed, without realistic possibility of withdrawal, by a detailed formal plan to terminate an employee or group of employees before the normal retirement date. When termination benefits are provided as a result of an offer made to encourage voluntary redundancy, the expense is recognized if it is probable that the offer will be accepted and the number of employees who will accept the offer can be reliably estimated.

Short-term employee benefits

For short-term employee benefits, the undiscounted amount of the benefits expected to be paid in respect of service rendered by employees in a period should be recognized in that period. A provision for the expected cost of variable salary payments is recognized when, and only when, the Group has a legal or constructive obligation to make such payments as a result of past events and a reliable estimate of the expected cost can be made.

Share-based payment

A decision was made in 2007 to implement an employee stock option program that will allow the employees to acquire shares in the company. The fair value of granted share options is recognized as a personnel expense with a corresponding increase in equity. Fair value is measured at the date of grant and is recognized over the remaining vesting period. The fair value of the stock options has been measured according to the Black & Scholes method, with consideration to the terms and conditions that applied on the date of grant. The amount recognized as an expense is adjusted to reflect the current number of vested options.

Social security liabilities arising from the employee stock option program are recognized over the same period or periods in which the employees render the services. Provisions for social security expenses are based on the fair market value of the options on the closing date. Fair market value is measured according to the same valuation model used on the date of grant, i.e. Black & Scholes.

Revenue recognition

The company's net sales consist entirely of revenue arising from the sale of goods (systems and system upgrades) and services. Sales are denominated mainly in USD, EUR and JPY.

Revenue is recognized when it is probable that the economic benefits associated with a transaction will flow to the company and when the amount of revenue can be measured reliably. Revenue arising from the sale of goods to a customer is recognized upon delivery in accordance with the agreed conditions of sale and delivery, i.e. when the significant risks and rewards of ownership have been transferred to the buyer. Revenue is reported net of any discounts.

Revenue relating to the sale of services, primarily linked to service agreements, is recognized upon provision of the service. Payments due under service agreements are invoiced in advance and are progressively recognized over the term of the agreement.

Expense recognition

In connection with the delivery of goods and recognition of income from a sale, all expenses related to the delivered goods are recognized in the profit and loss account. These expenses include all estimated remaining costs at the time of delivery, including provisions for setup and warranties, which are reported under "accrued expenses" and "warranty provisions" in the statement of financial position. The cost of setting up a system at a customer site is easy to estimate and relatively small in relation to the value of the system as a whole. After setup is completed, the warranty period begins and normally lasts for 12 months. These costs are assessed on an individual basis and are relatively easy to predict, based on previous experience.

Costs for the provision of services are expensed as incurred.

Interest income and expense

Interest income on receivables and interest expense on liabilities are recognized in the profit and loss account for the period in which they arise.

Interest income on receivables and interest expense on liabilities is calculated using the effective interest method.

Interest income and expense are recorded on an accruals basis and include amortized transaction costs or other differences between the initial carrying amount of the receivable or liability and the sum of the amount to be settled at maturity and estimated future cash payments or receipts over the life of the receivable or liability. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument to the net carrying amount of the financial asset or liability. Calculation of the effective interest rate takes into account all fees that form an

54 MICRONIC ANNUAL REPORT 2009

integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Operating expenses

The Group's expenses mainly refer to materials and supplies, personnel costs and other external expenses, primarily consisting of consulting fees. An assessment is made of costs incurred but not invoiced by suppliers for work performed during the financial year, and a corresponding provision is recognized in "accrued expenses" in the statement of financial position. Individual assessment is made of all ongoing research and development projects. Costs related to research are expensed as incurred. Costs for development projects that meet the criteria for capitalization are reported as intangible assets.

Earnings per share

Basic earnings per share are calculated on consolidated profit for the year attributable to equity holders in the Parent Company divided by the weighted average number of ordinary shares outstanding during the year. Diluted earnings per share are calculated on profit for the period and the average number of shares outstanding adjusted for the effects of all dilutive potential ordinary shares, which during the reported periods consisted of options/warrants granted to employees. Dilution arises only when the strike price of the options/warrants falls below the market price, and increases in proportion to the difference between the strike price and market price. Earnings per share are not affected when the company records a loss or when the strike price exceeds the market price.

NOTE 3. ACCOUNTING POLICIES OF THE PARENT COMPANY

The annual financial statements of the Parent Company are presented in accordance with the Swedish Annual Accounts Act and the Swedish Financial Reporting Board's recommendation RFR 2, Accounting for Legal Entities. The Swedish Financial Reporting Board's statements for listed enterprises are also applied. RFR 2 states that in the report for the legal entity, the Parent Company shall apply all EU-endorsed IFRSs and statements as far as possible within the framework of the Annual Accounts Act and with respect to the connection between accounting and taxation. The areas where the accounting policies of the Parent Company differ from those of the Group are described below.

Changes in accounting policies

The financial statements of the Parent Company are presented in accordance with the same accounting policies applied in 2008 with the exception of the principles described below for reporting of dividends received from subsidiaries. For a description of future changes in the applied accounting policies due to new or revised standards, see "Compliance with laws and norms" for the Group on page 51.

Revisions to IFRS 1, First-Time Adoption of IFRS, and IAS 27, Consolidated and Separate Financial Statements, regarding costs incurred for investments in subsidiaries, joint ventures and associated companies are applied as of January 1, 2009. As a result of this change, the Parent Company always recognizes the full amount of dividends received from subsidiaries as revenue in profit or loss for the year. Previously, dividends in excess of profits arising after acquisition of the subsidiary have reduced the carrying amount of the investment in the subsidiary. The change of policy has not had any impact on the financial statements of the Parent Company.

Development costs

All costs, for both research and development, are expensed as incurred.

Leases

The Parent Company classifies all leases as operating leases, which means that the lease expense is recorded as an operating expense in the profit and loss account.

Taxation

In the Parent Company, untaxed reserves are reported gross including the deferred tax portion. In the Group, however, untaxed reserves are divided between deferred tax liability and equity.

Subsidiaries

In the Parent Company, shares in subsidiaries are accounted for according to the purchase method. The Parent Company recognizes the full amount of dividends received from subsidiaries as revenue in profit or loss for the year.

Intra-group receivables that comprise net investments in foreign operations

The Parent Company's long-term loans to a foreign operation that form part of the Parent Company's net investment in the foreign operation are translated at the closing day rate of exchange. Foreign exchange differences arising on translation of such monetary items are recorded separately within a translation reserve in equity.

Derivatives and hedge accounting

In view of the changed rules in RFR 2 and the connection between accounting and taxation, the rules on financial instruments and hedge accounting in IAS 39 are not applied by the Parent Company as a legal entity and will continue to be applied only in the Group. Derivatives consist of forward exchange contracts that are used to reduce transaction exposure in foreign currencies for which hedge accounting is applied. Derivatives are not recorded in the balance sheet in cases where the hedged item is held off-balance sheet. When recognized in the balance sheet, the hedged item is measured with respect to the effects of the hedging instrument. In cases where receivables and liabilities are hedged against foreign exchange risk, the hedged asset or liability is measured at the exchange rate prevailing on the hedging date.

NOTE 4. CRITICAL ACCOUNTING ESTIMATES AND ASSUMPTIONS

The preparation of financial statements in conformity with IFRS requires the management to make assumptions that affect the application of the Group's accounting policies. When preparing the financial statements, the company's management is also required to make certain estimates and assumptions about the future that affect the reported amounts of assets and liabilities on the closing date and the reported amounts of revenues and expenses during the reporting period. The actual results may differ from these estimates. The significant assumptions and estimates are specified below.

Capitalized development costs

Development projects where knowledge gained from research and practical experience are directed towards producing new products, processes or systems are recognized as intangible assets in the balance sheet when they meet the criteria for capitalization. Development costs may be capitalized only when the company can demonstrate the technical feasibility of completing the intangible asset, the intention and ability to complete the asset and use or sell it, the probability that the asset will generate future economic benefits, the availability of adequate resources to complete the development and to use or sell the asset and the ability to reliably measure the costs attributable to the asset during its development. The reported value includes all directly attributable costs, such as those for materials, salaries and compensation to employees engaged in R&D activities. Individual assessment is made of all ongoing research and development projects to determine whether these criteria have been met.

However, because it may be difficult to distinguish between research and development projects, this judgment can be affected by individual interpretations.

Useful life and impairment of capitalized development costs

The company regularly reviews capitalized development costs to look for any indication of impairment. Each development project is individually tested for impairment through a quarterly estimation of discounted future cash flows that includes intangible assets not yet completed. This valuation is made and judged by the management and is also reviewed by the audit committee.

Amortization of intangible assets is based on the estimated useful life of the asset. Depending on which useful life is determined for an asset, this can have a significant impact on Group's reported profit. The expected residual value of an intangible asset at the end of its useful life is always set at zero.

Amortization of capitalized development costs is started when the respective development project is completed, normally when it begins generating revenue. At that time, a straight-line amortization is started over a three-year period.

The reported value of goodwill and brand with unidentified useful life is tested for impairment at least once a year. The impairment test is based on value in use, which in turn is based on cash flow estimates for five years for the cash generating entity to which the values belong.

These judgments can have a large impact on the Group's reported profit.

Warranty and installation commitments

In connection with delivery of systems and recognition of income from the sale, provisions are made for setup and warranty expenses. The costs for setting up a system at a customer site are easy to assess and are relatively small in relation to the value of the system as a whole. When setup is completed, a warranty period begins and normally lasts for 12 months. These expenses are estimated on an individual basis and are comparatively easy to determine based on previous experience.

Deferred tax assets

Deferred tax assets are continuously assessed. In such an impairment test, the tax assets are put against future profit, based on strategic plans and management judgements.

MICRONIC ANNUAL REPORT 2009

NOTE 5. ITEMS AFFECTING COMPARABILITY

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Cost of goods sold
Write-down of inventory components	-12,000	-67,407	-	-58,998
Other income and expenses
Property sale	-	97,772	-	97,772
Restructuring of operations	-41,785	-14,837	-18,873	-14,837
Operating profit/loss	-53,785	15,528	-18,873	23,937

Operating profit is affected by items affecting comparability. Costs for the write-down of component inventories are recognized in costs of goods sold. The write-down in 2009 refers entirely to components for SMT equipment. The write-down in 2008 referred entirely to components for pattern generators.

Other income and expenses for 2009 include costs for restructuring of operations in both business areas. In 2008 this item included the capital gain on the sale of the property in Täby and costs for restructuring of operations in Sweden, which led to a staff reduction of 27 employees.

EBIT comparison

	GROUP
	2009	2008
Operating loss according to profit and loss account	-145,835	-37,460
Net capitalization/amortization of R&D	62,400	-47,700
Items affecting comparability	53,785	-15,528
Amortization of excess values	22,200	-
EBIT comparable	-7,450	-100,688

The table above illustrates the effect of a number of items in a comparison of operating profit between 2008 and 2009.

The acquisition of MYDATA and the ongoing integration process have affected the reported profit for 2009. Amortization of excess values attributable to the acquisition have been charged to consolidated profit in an amount of SEK 22 million.

As a result of the acquisition, items affecting comparability have also been recognized. These include the write-down of inventories and comparable items items relating to SMT equipment and costs for restructuring of operations. The restructuring charges consist of costs for CEO appointments and the reorganization of operations in both business areas.

The Group's profit is affected by the recognition of R&D expenses. No major development projects were capitalized during 2009, in contrast to 2008. However, amortization has been started on projects that were capitalized through the end of 2008. The net sum of this reporting has a negative effect on profit of SEK 110 million in a comparison between 2008 and 2009.

NOTE 6. BUSINESS COMBINATIONS

On July 2, 2009, Micronic acquired 100 percent of the shares in MYDATA. The acquisition was carried out through a non-cash issue, after which MYDATA's former principal owner Skanditek holds 38 percent of the shares in Micronic. Micronic's share capital has increased by 26,111,057 shares to a total of 65,277,673 shares.

During the last six months of 2009, the MYDATA group contributed SEK -24 million. If the acquisition had taken place on January 1, 2009, the Group's net sales would have been SEK 1,052 million and the loss for 2009 would have been SEK -179 million.

MYDATA's net assets on the acquisition date

	Carrying amount in MYDATA prior to acquisition	Fair value adjustment	Fair value, reported in Group
Capitalized development costs	70,198	23,000	93,198
Brand	-	20,000	20,000
Customer relationships	-	13,000	13,000
Order backlog	-	2,000	2,000
Tangible assets	7,348	-	7,348
Non-current receivables	41,947	-	41,947
Inventories	107,529	17,000	124,529
Trade receivables and other receivables	118,402	-	118,402
Cash and cash equivalents	22,606	-	22,606
Interest-bearing liabilities	-34,526	-	-34,526
Provisions	-951	-	-951
Trade payables and other liabilities	-113,016	-	-113,016
Deferred tax liabilities	-19,336	-19,725	-39,061
Net identifiable assets and liabilities	200,201	55,275	255,476
Acquired goodwill			64,344
Acquisition value, including fees for legal services			319,820
Fees for legal services amount to			6,486

In connection with the acquisition of MYDATA, Micronic has allocated excess values, i.e. the difference between the cost of acquisition and the value of MYDATA's net assets on the acquisition date, to tangible and intangible assets through a process in which these have been identified and assigned a value. Excess values that could not be attributed to balance sheet items have been attributed to goodwill. An assessment indicates excess values in MYDATA's technology. Like Micronic and in accordance with IFRS, MYDATA capitalizes development projects in the balance sheet until these start to generate revenue. Furthermore, already developed technology has an assessed value for future operations in the merged group. MYDATA has a strong brand under which the company's products are sold and its reported value has been estimated based on a reasonable cost for the use of an equivalent brand. The company's customer relationships also have an assessed value for the merged group, since MYDATA is a firmly established supplier than has delivered a large number of systems to many customers in its markets, where individual customers have also invested in several MYDATA systems over time. In addition, values have been identified in the order backlog existing on the date of acquisition and in inventories. The excess values that are attributed to goodwill consist mainly of values in the expertise found among the company's employees and in the synergies that are expected to arise through the merger. Excess values in the order backlog and inventories are amortized in pace with their realization or sale, which has taken place during 2009. Excess values in technology are amortized over a period of five years, which corresponds to the amortization schedule used by MYDATA for capitalized development costs. Excess values in customer relationships are amortized over a period of seven years from the acquisition date. Acquired goodwill and the estimated value of brands are not amortized on a straight-line basis, but are instead tested regularly for impairment. See Note 19.

The acquisition of MYDATA took place on July 2, 2009, and the acquisition value has been allocated based on the balance sheet at June 30, 2009. Below is a presentation of the two groups' balance sheets at June 30 and a consolidated balance sheet after allocation of actual excess values.

MICRONIC ANNUAL REPORT 2009

Note 6, cont'd.

Acquisition balance sheets

SEK thousand	Micronic Group June 30, 2009	MYDATA Group June 30, 2009	Acquisition adjustments	Merged Group June 30, 2009
ASSETS
Capitalized development costs	99,260	70,198	23,000	192,458
Other intangible assets	862			862
Brand			20,000	20,000
Customer relationships			13,000	13,000
Order backlog			2,000	2,000
Goodwill			64,344	64,344
Tangible assets	64,069	7,348		71,417
Non-current receivables	36,599	5,083		41,682
Deferred tax assets	67,616	36,864		104,480
Total non-current assets	268,406	119,493	122,344	510,243
Inventories	269,438	107,529	17,000	393,967
Other receivables	263,246	118,402		381,648
Cash and cash equivalents	353,380	22,606		375,986
Total current assets	886,064	248,537	17,000	1,151,601
TOTAL ASSETS	1,154,470	368,030	139,344	1,661,844
EQUITY AND LIABILITIES
Equity	950,697	200,201	109,914	1,260,812
Non-current interest-bearing liabilities	5,702	0		5,702
Other non-current liabilities	7,651	951		8,602
Deferred tax liabilities	19,296	19,336	19,725	58,357
Total non-current liabilities	32,649	20,287	19,725	72,661
Current interest-bearing liabilities	5,541	34,526		40,067
Other current liabilities	165,583	113,016	9,704	288,303
Total current liabilities	171,124	147,542	9,704	328,370
Total liabilities	203,773	167,829	29,429	401,031
TOTAL EQUITY AND LIABILITIES	1,154,470	368,030	139,343	1,661,844

MICRONIC ANNUAL REPORT 2009

NOTE 7. SEGMENT REPORTING

	2009
	Pattern generators	SMT equipment	Group-wide	Group
Income
Income from external customers	578,937	249,959	–	828,896
Total income	578,937	249,959	–	828,896
of which customers representing more than 10 percent of pattern generator sales	277,874
Operating expenses and operating profit
Capitalized development costs		1,412		1,412
Amortization of capitalized development costs	-51,815	-11,976		-63,791
Depreciation of other non-current assets	-28,964	-1,458		-30,422
Costs related to excess values in inventories			-17,000	-17,000
Costs related to excess values in order backlog			-2,000	-2,000
Amortization of excess values in intangible assets			-3,229	-3,229
Operating profit/loss	-99,219	-23,996	-22,620	-145,835
Reconciliation of operating profit/loss
Operating profit/loss from each segment	-99,219	-23,996		-123,215
Amortization of excess values in inventories			-17,000	-17,000
Amortization of excess values in order backlog			-2,000	-2,000
Amortization of excess values in intangible assets			-3,229	-3,229
Group-wide			-391	-391
Reported operating profit/loss in the Group				-145,835
Assets
Capitalized development	73,353	59,633		132,986
Other intangible assets	2,164	117,116		119,280
Tangible assets	53,226	5,833		59,059
Inventories	262,124	78,922		341,046
Investments
Capitalized development costs		1,412		1,412
Other investments	5,568	401		5,969
	GROUP		PARENT COMPANY
---	---	---	---	---
Net sales by geographical market	2009	2008	2009	2008
Sweden	5,335	–	–	–
Europe outside Sweden	122,406	258	67	258
USA	109,964	106,442	6,422	93,787
Asia	581,997	461,917	398,736	339,350
Other markets	9,194
Total	828,896	568,617	405,225	433,395
of which, system sales	472,051	386,848	309,094	389,876
of which, after market sales	356,845	181,769	96,131	43,519
	828,896	568,617	405,225	433,395

The company has two operating segments. The first segment comprises operations in the pattern generator business area, consisting of development, manufacture and marketing of a series of extremely accurate laser pattern generators for the production of photomasks. The systems are used by electronics companies in the manufacture of displays and semiconductors. The systems for photomask production are produced in a similar way despite different application areas, are distributed in a similar manner and are largely sold to the same customers regardless of application area.

The second comprises operations in the SMT equipment business area, consisting of development, manufacture and marketing of advanced surface mount (SMT) equipment for flexible electronics production. The equipment is used for stencil-free jetting of solder paste on PCBs and surface mounting of electronic components on PCBs.

58 MICRONIC ANNUAL REPORT 2009

NOTE 8. OPERATING EXPENSES

	GROUP
	2009	2008
Costa allocated by function and cost type (excl. work performed by the company for its own use and capitalized)
Raw materials and consumables	245,017	182,356
Changes in product inventories and products in progress	-17,202	15,466
Personnel costs	383,686	332,086
Depreciation/amortization	97,442	72,421
Other external costs	224,251	200,778
	933,194	803,107

Intra-group transactions:
Of the year's purchases, 10 percent (6) was attributable to group companies.
Of the year's sales, 19 percent (11) was attributable to group companies.

NOTE 9. DEPRECIATION/AMORTIZATION BY FUNCTION

Group 2009	Customer relationships	Business system	Development expenses	License	Buildings and land	Machinery and equipment	Total
Cost of goods sold		548				19,379	19,927
Research and development expenses		678	2,300			8,074	11,052
Research and development, capitalized development costs			63,791				63,791
Selling expenses	929	57				695	1,681
Administrative expenses		153				838	991
	929	1,436	66,091	-	-	28,986	97,442
Group 2008
Cost of goods sold		754			1,411	19,027	21,192
Research and development expenses		691			1,566	18,764	21,021
Research and development, capitalized development costs			24,221				24,221
Selling expenses		62			141	386	589
Administrative expenses		149		3 132	340	1,777	5,398
	-	1,656	24,221	3 132	3,458	39,954	72,421
Parent Company 2009
Cost of goods sold		548				16,560	17,108
Research and development expenses		678				9,274	9,952
Selling expenses		57				243	300
Administrative expenses		153				662	815
	-	1,436	-	-	-	26,739	28,175
Parent Company 2008
Cost of goods sold		754			1,411	17,396	19,561
Research and development expenses		691			1,566	17,169	19,426
Selling expenses		62			141	386	589
Administrative expenses		149		3,132	340	828	4,449
	-	1,656	-	3,132	3,458	35,779	44,025

MICRONIC ANNUAL REPORT 2009

NOTE 10. FEES FOR AUDITING AND NON-AUDITING SERVICES

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Fees and compensation, auditing, etc
Auditing assignments, KPMG	2,365	1,120	1,223	937
Auditing assignments, Ernst&Young	40	–	–	–
Auditing assignments, other	10	–	–	–
Auditing assignments, total	2,415	1,120	1,223	937
Non-auditing assignments	509	313	300	283

Auditing assignments refer to the auditing of the consolidated financial statements, the accounts and the administration of the board of directors and the CEO of the company, other tasks that befall on the company's auditor, and advice or other assistance prompted by observations from such audits or the performance of other such tasks. All other work is classified as "non-auditing assignments". In 2007, non-auditing assignments included services in a project to develop processes for evaluation of internal control. The 2007 elected KPMG as the company's auditor.

NOTE 11. OTHER OPERATING INCOME/EXPENSES

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Other operating income
Foreign exchange gains	11,716	18,559	–	23,544
Capital gain on property sale	–	97,722	–	97,722
Other	1,950	5,286	1,281	6,467
	13,666	121,567	1,281	127,733
of which, exchange rate differences on non-hedge accounting derivatives	607	–	2,714	–
Other operating expenses
Foreign exchange losses	3,948	–	2,432	–
Other	43,564	21,611	18,920	21,258
	47,512	21,611	21,352	21,258
of which, exchange rate differences on non-hedge accounting derivatives	–	753	–	193

NOTE 12. RESEARCH AND DEVELOPMENT EXPENSES

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Research and development expenses	186,729	197,308	156,631	200,720
Capitalized development costs	-1,412	-71,885	–	–
Amortization of previously capitalized development costs	63,791	24,221	–	–
Amortization of excess values in technology	2,300	–	–	–
	251,408	149,644	156,631	200,720

NOTE 13. EMPLOYEES, PERSONNEL COSTS AND REMUNERATION TO SENIOR EXECUTIVES
Remuneration to the board, CEO and other senior executives, 2009

	Board fees	Committee fees	Basic salary	Other remuneration^{1}	Variable salary	Other benefits	Pension costs	Employee stock options	Total	Employee stock options, number
Rune Glavare, Board Chairman as of July 2, 2009	375	75	–	–	–	–	–	–	450	–
Lena Treschow Torell, Vice Chairman as of July 2, 2009	331	50	–	–	–	–	–	–	381	–
Sigrun Hjelmquist, Board member until July 2, 2009	50	13	–	–	–	–	–	–	63	–
Magnus Lindquist	200	50	–	–	–	–	–	–	250	–
Göran Malm	219	13	–	–	–	–	–	–	231	–
Åke Svensson, Board member as of July 2, 2009	200	50	–	–	–	–	–	–	250	–
Patrik Tigerschiöld, Board member as of July 2, 2009	150	38	–	–	–	–	–	–	188	–
Total remuneration to the Board	1,525	288	–	–	–	–	–	–	1,812	–
Peter Uddfors, CEO as of November 23, 2009	–	–	278	3	–	–	66	–	347	–
Sven Löfquist, CEO until November 23, 2009	–	–	2,371	5,803	894	64	1,247	162	10,542	75,000
Other senior executives (7 persons)	–	–	8,801	3,969	1,662	439	3,560	452	18,884	210,000
Total remuneration to the CEO and other senior executives	–	–	11,450	9,776	2,556	504	4,873	614	29,772	285,000
Total remuneration to the Board, CEO and other senior executives	1,525	288	11,450	9,776	2,556	504	4,873	614	31,584	285,000

1) Other remuneration includes termination benefits to the CEO in an amount of SEK 5,774 thousand and to other senior executives in an amount of SEK 3,734 thousand excluding social security expenses.

60 MICRONIC ANNUAL REPORT 2009

Note 13, cont'd.

Remuneration to the Board, CEO and other senior executives, 2008

	Board fees	Committee fees	Basic salary	Other remuneration	Variable salary	Other benefits	Pension costs	Employee stock options	Total	Employee stock options, number
Christer Elmehagen, Board Chairman	500	50	–	–	–	–	–	–	550	–
Göran Malm, Vice Chairman	275	50	–	–	–	–	–	–	325	–
Jörgen Centerman	200	50	–	–	–	–	–	–	250	–
Sigrun Hjelmquist	200	50	–	–	–	–	–	–	250	–
Magnus Lindquist	200	50	–	–	–	–	–	–	250	–
Lena Treschow Torell	200	50	–	–	–	–	–	–	250	–
Total remuneration to the Board	1,575	300	–	–	–	–	–	–	1,875	–
Sven Löfquist, CEO	–	–	2,339	42	841	70	1,255	409	4,957	75,000
Other senior executives (7 persons)	–	–	8,688	387	1,641	423	2,321	1,324	14,784	245,000
Total remuneration to the CEO and other senior executives	–	–	11,027	429	2,482	493	3,576	1,733	19,740	320,000
Total remuneration to the Board, CEO and other senior executives	1,575	300	11,027	429	2,482	493	3,576	1,733	21,615	320,000

Remuneration and benefits of the board of directors

The members of the board, with the exception of the CEO, receive remuneration according to the decision of the 2009 AGM. No fees are paid to the boards of the subsidiaries. Additional fees are paid for work on the audit and nomination committees.

Latest approved principles for remuneration to senior executives

Other senior executives refer to the individuals who, together with the CEO make up the executive management team. For the composition of the management team, see pages 32–33. The principles for remuneration to senior executives are prepared by the board's remuneration committee, after which the board passes a decision on the proposed principles. The principles are then approved by the AGM. In handling matters related to remuneration, external advice is sought when necessary. The main principle adopted by the AGM is to offer senior executives market-based remuneration and other terms of employment. Actual levels of remuneration are determined on the basis of factors such as expertise, experience and performance. The total remuneration package for senior executives consists of basic salary, variable salary, pension benefits in the form of defined contribution pension premiums, other benefits and an incentive scheme consisting of an employee stock option program that includes all employees in the Parent Company. Other benefits consist of company cars and healthcare insurance.

Remuneration and benefits of the CEO

Sven Löfquist was CEO until November 23, 2009. For 2009, basic salary to Sven Löfquist amounted to SEK 3,505,956. This is a total compensation which the CEO may, at his own discretion, receive in the form of cash salary and/or for payment of pension premiums. In 2009 Sven Löfquist chose to allocate SEK 1,246,872 to pension premiums. The maximum amount of variable remuneration for 2009 is equivalent to 50 percent of basic salary, of which 20 percent is based on the Group's net profit and 30 percent on individual goals set by the board. For 2009 the company did not meet the target for net profit. However, variable salary for the individually set goals is payable to the CEO. Variable salary for 2009 has not yet been paid, but a provision has been made for variable salary to Sven Löfquist in the amount of SEK 894,000, which is equal to 25 percent of basic salary. In 2009, variable salary for 2008 was paid to Sven Löfquist in an amount of SEK 859,000, for which a provision of SEK 841,000 was made in the annual accounts for 2008. Under the employee stock option program that was approved by the 2007 AGM, the CEO was granted 75,000 options. The cost of this benefit in 2009 was SEK 162,000 excluding social security expenses.

The employment contract with the CEO specifies a mutual notice period of six months. The employment contract, with related benefits, is valid during the notice period. The employment contract with Sven Löfquist runs until February 11, 2010. Costs for salary, other benefits and social security expenses during the notice period amount to SEK 392,000. After this, in accordance with the employment contract, an amount equal to 18 months' salary will be payable. The total amount of compensation paid as termination benefits on expiry of the employment contract is SEK 5,259,000 plus social security expenses of SEK 1,652 million. No other benefits are payable after the end of the employment period. All remuneration to Sven Löfquist was expensed during 2009, including the portion not yet paid.

Peter Uddfors took over as CEO on November 23, 2009. The total remuneration package for Peter Uddfors consists of basic salary, variable salary in a maximum amount equal to 50 percent of an annual salary, pension benefits and health insurance, company car benefits and free healthcare insurance. According the agreement, basic salary amounts to SEK 2,640,000 per year. Pension and health insurance benefits amount to a cost equal to 30 percent of basic salary. The employment contract with Peter Uddfors specifies a notice period of nine months in the event of dismissal by the company, in which case he is entitled to termination benefits corresponding to 12 months' salary after the period of notice. Peter Uddfors is entitled to basic salary and other benefits during the notice period, after which no benefits are payable. The retirement age is 65 years. No variable salary is payable for 2009. Remuneration to Peter Uddfors in 2009 amounted to salary of SEK 278,000 and pension benefits of SEK 66,000.

Remuneration and benefits of other senior executives

The Micronic Group Management Team during 2009 consisted of 8 persons (8), of whom 1 (1) was a woman. A reorganization in December also led to changes in the management team, which now consists of 7 persons. The reported remuneration includes remuneration to two new senior executives for the month of December.

Variable salary is individualized and the maximum amount for 2009 was between 30 and 40 percent of basic salary. Variable salary is based on attainment of the Group's net profit target and individual earnings-linked goals set in consultation with the CEO according to guidelines from the board's remuneration committee. For 2009 the company has not met the target for net profit. However, variable salary for the individual goals is payable. Variable salary for 2009 has not yet been paid but a provision has been made in an amount of SEK 1,662,000, which is equal to 19 percent of basic salary. In 2009, variable salary for 2008 was paid in an amount of SEK 1,166,000, for which a provision was made in 2008. Under the employee stock option program that was adopted by the 2007 AGM, the now active other senior executives have been granted 35,000 options each, for a total of 210,000 options. The cost of this benefit in 2009 was SEK 453,000 excluding social security expenses. The pension cost for other senior executives refers to payment of defined contribution pension premiums. Aside from payment of premiums, there are no pension obligations.

The employment contract with the CFO specifies a notice period of nine months in the event of dismissal by the company, in which case he is also entitled to termination benefits corresponding to 12 months' salary after the period of notice. In cases where termination benefits are received, no other benefits are payable.

In 2009 a provision was made for costs of termination benefits to former senior executives.

The employment contract with the SVP Customer Operations, who is also president of the South Korean subsidiary, specifies a notice period of two months in the event of dismissal by the company, in which case he is entitled to termination benefits corresponding to two months's salary for each year of service after the period of notice. In cases where termination benefits are received, no other benefits are payable. For other senior executives there is a notice period of three to six months in the event of dismissal by the company, with termination benefits equal to six months' salary. The employment contract, with related benefits, is valid during the notice period. In cases where termination benefits are received, no other benefits are payable.

MICRONIC ANNUAL REPORT 2009

Note 13, cont'd.

Sickness absence as a percentage of scheduled working hours, Parent Company	2009	2008
Total sickness absence	2.13	1.73
of which, sickness absence for a continuous period of 60 days or more	0.94	0.87
Sickness absence för women	5.32	3.96
Sickness absence för men	1.20	1.20
Sickness absence, employees up to 29 years	1.09	0.01
Sickness absence, employees 30–49 years	0.11	1.01
Sickness absence, employees 50 years and older	0.93	0.71
Average number of employees	2009
---	---	---
Parent Company	Women	Men
Sweden	48	208
China	1	-
Total in Parent Company	49	208
Subsidiaries
Sweden	21	123
France	1	12
Japan	12	59
China	-	3
The Netherlands	1	7
Singapore	2	7
UK	2	7
South Korea	3	22
Taiwan	1	3
Germany	4	15
USA	11	40
Total in subsidiaries	58	298
Total in Group	107	506
Gender distribution in board and management team	2009
---	---	---
Parent Company	% of women	% of men
Board of directors	17	83
Other senior executives	13	87
Total Group
Board of directors	2	98
Other senior executives	6	94

62 MICRONIC ANNUAL REPORT 2009

Note 13, cont'd.

Salaries and other remuneration	2009			2008
Parent Company	Board and senior executives	Other employees	Total	Board and senior executives	Other employees	Total
Sweden, 11 persons (13)	14,772	116,136	130,908	15,766	138,376	154,142
China	-	74	74	-	76	76
Total Parent Company	14,772	116,210	130,982	15,766	138,453	154,218
Subsidiaries, 13 persons (4)	11,902	122,488	134,390	5,105	60,895	66,000
Total Group	26,674	238,698	265,372	20,871	199,348	220,218

The reported remuneration to employees includes accrued variable salary payable on the attainment of individual goals for 2009 amounting to a total of SEK 10 million excluding social security expenses, of which SEK 7 million in the Parent Company. The variable salary is expected to be paid out in March 2010. Expensed share-based payments in the Parent Company amounted to SEK 2 million excluding social security expenses and consist of costs for the employee stock option program that was adopted by the 2007 AGM. The total cost of the option program is estimated at approximately SEK 12 million and is accrued over the period ending in March 2010. As of December 31, 2009, total costs of SEK 11 million had been recognized. In 2009 a provision was made to cover costs for restructuring of operations in both business areas. This cost is recognized in other operating expenses and is not included in the salary costs reported above. Of these costs, which amount to a total of SEK 34 million, SEK 19 million refers to the Parent Company and SEK 34 million to the Group.

Total salaries and security expenses	2009			2008
	Salaries and other remuneration	Social security expenses	Total	Salaries and other remuneration	Social security expenses	Total
Parent Company	130,981	69,961	200,942	154,219	83,591	237,809
(of which, pension costs)		(23,408)			(28,332)
Subsidiaries	134,390	32,842	167,231	66,000	10,252	76,252
(of which, pension costs)		(11,112)			(4,460)
Total Group	265,371	102,803	368,173	220,219	93,843	314,061
(of which, pension costs)		(34,520)			(32,792)

NOTE 14. EMPLOYEE STOCK OPTION PROGRAM

The 2007 Annual general meeting resolved to approve an employee stock option program 2007/2012.

Under the program Micronic may issue 1,540,000 warrants for subscription to shares, of which a total of 1,155,000 may be awarded to the employees. In order to ensure Micronic's completion of its obligations to the holders of the employee stock options, including payment of social security expenses arising on the benefit upon exercise of the employee stock options, the AGM also decided to approve the issuance of 1,540,000 warrants to Micronic Treasury AB for subscription to shares. Of these, 385,000 are intended to cover the cost of social security expenses. As a consequence of this, the company's share capital may be increased by not more than SEK 1,540,000. All employees in the Parent Company are covered by the employee stock option program, but must be employed in order to exercise the options. The board has established four categories with different terms of grant.

The options have been issued in an amount of 40, 30 and 30 percent of the total number of options granted on the dates falling ten trading days after publication of the interim reports for the second, third and fourth quarters of 2007. The earliest opportunity to exercise the granted options was March 29, 2008. No options were exercised during 2009. The decrease in the total number of options outstanding is due to the fact that employees ended their employment, meaning that the arrants were forfeited.

The employee stock options were granted free of charge. The strike price is equal to 115 percent of the average market value on the ten trading days following publication of the respective interim reports, and for the three grant dates amounted to SEK 57, 54 and 34.

The original valuation of the employee stock options, as a basis for reporting the costs of the program, was carried out on the date of grant which was set at July 19, 2007. The valuation is based on assumptions that have affected the amount expensed as a cost. The costs of the employee stock option program will be recognized in reported profit through the first quarter of 2010. The following parameters have been used in the initial valuation, which has been performed according to the Black&Scholes model.

The initial valuation is fixed, with the exception of the assumption about the share of employees remaining on the respective exercise dates. This assumption may be hanged on the basis of actual conditions. The total cost will also be changed, since social security expenses are calculated on fair market value and a new estimation of fair market value is carried out every quarter.

The cost excluding social security expenses is recognized as an administrative expense with a corresponding reduction directly in equity, while social security expenses are recognized as an administrative expense and an accrued expense in the balance sheet. Anticipated volatility corresponds to historical volatility during six months prior to the AGM decision.

Of the total number of options granted members of the executive management team have been granted 285,000. Costs for the employee stock option program were charged to operating profit for 2009 in an amount of SEK 2 million and a total of SEK 11 million since the program's inception. The total cost up until 2010 is estimated at SEK 12 million.

	Grant period 1	Grant period 2	Grant period 3	Total
Maximum number of new shares to be issued	616,000	462,000	462,000	1,540,000
Maximum number of options available for grant to employees	462,000	346,500	346,500	1,155,000
Actual number of options granted	434,800	326,100	326,100	1,087,000
Value per option	11.96	13.26	14.53
Valuation date, so called grant date	07-07-19	07-07-19	07-07-19
Share price on grant date	48.70	48.70	48.70
Strike price on grant date	54.00	54.00	54.00
Estimated average maturity	3 years	3.5 years	4 years
Interest (Stibor plus interest on treasury bills, time-weighted)	4.17%	4.25%	4.34%
Anticipated volatility	35%	35%	35%
Dividends	0	0	0
Assumption about the share of employees remaining on the respective exercise dates	80%	80%	80%
Total estimated cost during term of the program (including social security expenses)	5,574	4,635	5,079
Actual strike prices	57.00	54.00	34.00
Number of options initially granted				1,087,000
Change during 2008				-145,850
Change during 2009				-62,400
Number of options outstanding at December 31, 2009				878,750
Share of initially granted number of options				81%
Valuation of options at December 31, 2009	0	0	0	0

MICRONIC ANNUAL REPORT 2009

NOTE 15. NET FINANCIAL ITEMS

	GROUP
	2009	2008
Interest income	4,884	13,320
Financial income	4,884	13,320
Interest expenses	6,835	11,377
Financial expenses	6,835	11,377
Financial net	-1,951	1,943

Interest expenses are expensed as incurred, while accrued expenses are calculated to obtain the total interest expense for the entire period. No interest expense has been capitalized as an asset item.

NOTE 16. RESULT FROM FINANCIAL INVESTMENTS

	PARENT COMPANY
	2009	2008
Interest income from group companies	586	955
Other interest income	2,658	13,243
Dividends	8,631	-
Interest income and similar profit/loss items	11,875	14,198
Interest expenses	1,472	10,183
Interest expenses and similar profit/loss items	1,472	10,183
Result from financial investments	10,403	4,015

NOTE 17. LEASES

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Equipment held under finance leases:
Opening balance, historical cost	78,460	78,460	-	-
The year's purchases	-	-	-	-
Historical cost of equipment held under finance leases	78,460	78,460	-	-
Opening balance, depreciation	-78,460	-75,853	-	-
The year's depreciation	-	-2,607	-	-
Accumulated depreciation of equipment held under finance leases	-78,460	-78,460	-	-
Closing balance, residual value of equipment held under finance leases	-	-	-	-
The year's expensed lease charges (finance leases)	-	3,982	-	3,982
	GROUP		PARENT COMPANY
---	---	---	---	---
	2009	2008	2009	2008
The year's expensed lease charges (operating leases)	27,447	9,647	10,998	3,787
of which, variable fees	14,067	2,295	6,239	2,295
Future payments under operating leases and other lease agreements (nominal):
Within one year	26,898	19,445	8,321	11,654
Between one and five years	64,974	79,237	36,454	64,060
Later than five years	122,964	150,560	121,075	149,170
Future payments under operating leases and other lease agreements (present value):
Within one year	26,324	19,200	8,158	11,409
Between one and five years	57,705	71,047	32,467	55,870
Later than five years	85,197	100,520	83,678	99,130

64 MICRONIC ANNUAL REPORT 2009

NOTE 18. TAXES

Group	GROUP
Recognized in profit and loss	2009	2008
Current tax
The year's tax expense	-11,379	-7,703
	-11,379	-7,703
Deferred tax
Deferred tax on temporary differences	-16,501	21,706
Deferred tax on the year's change in capitalized loss carryforwards	15,709	2,642
Deferred tax on capitalized development	16,406	-13,346
Deferred tax on group-wise acquired assets	5,846	-
Deferred tax on intra-group profit carried in inventory	-4,207	3,767
Deferred tax arising from the use of previously not capitalized loss carryforwards	-1,368	-8
Deferred tax arising from changed corporate tax rate	-	-3,634
Deferred tax on derivatives arising from hedge accounting	-1,273	613
Deferred tax on untaxed reserves	-	1,526
Other	460	-691
	15,072	12,575
Total reported tax in the Group	3,693	4,872
Reconciliation of effective tax rate	2009
---	---	---
Profit before tax		-147,786
Tax according to applicable tax rate in the Parent Company	26.3%	38,868
Effect of different tax rates in foreign subsidiaries	-0.2%	-235
Non-deductible/non-taxable items	-1.0%	-1,434
Effect of loss carryforwards previously not capitalized	-3.3%	4,825
Increase in loss carryforwards without corresponding capitalization of deferred tax	-25.8%	-38,152
Effect of changed corporate tax rate	0.0%	-
Other	-0.1%	-179
Reported effective tax	2.68%	3,963
Tax items recognized in other comprehensive income
Value changes on derivatives used for hedging of foreign exchange risk in cash flow hedges
Foreign exchange differences on foreign currency loans treated as net investments in foreign subsidiaries
Other

Recognized deferred tax assets and liabilities	2009
---	---	---
	Deferred tax assets	Deferred tax liabilities
Tangible assets	1,792	-333
Intangible assets		-34,976
Group-wise acquired assets		-13,879
Derivatives used as hedge instruments		-890
Trade receivables	1,065
Inventories	17,376
Provisions	2,613
Accrued expenses	2,191
Other	1,544
Loss carryforwards	102,904
Deferred tax assets/liabilities	129,485	-50,078
Setoff	-5,937	5,937
Net deferred tax assets/liabilities	123,548	-44,141

Setoff is carried out within the same tax item.

MICRONIC ANNUAL REPORT 2009

Note 18, cont'd.

Changes in deferred tax	Opening balance January 1, 2009	Recognized in profit and loss	Recognized in comprehensive income	Added through business combinations	Closing balance December 31, 2009
Tangible assets	500	-412	-94	1,465	1,459
Intangible assets	-32,919	16,405	-	-18,462	-34,976
Group-wise acquired assets	-	5,846	-	-19,725	-13,879
Derivatives used as hedge instruments	2,258	-1,273	-1,001	-874	-890
Trade receivables	354	-141	-22	874	1,065
Inventories	26,422	-17,769	-580	9,303	17,376
Provisions	2,839	-1,727	-36	1,537	2,613
Accrued expenses	485	-68	-25	1,799	2,191
Other	1,965	-507	-26	489	1,542
Loss carryforwards	66,854	14,718	-65	21,397	102,904
	68,758	15,072	-1,849	-2,197	79,407

Parent Company

Recognized in profit and loss	2009	2008
Current tax
The year's tax expense	-3,213	-
	-3,213	-
Deferred tax
Deferred tax on temporary differences	-12,746	17,916
Deferred tax on the year's change in capitalized loss carryforwards	8,939	2,785
Deferred tax arising from using previously not capitalized loss carryforwards	-	-8
Deferred tax arising from a changed corporate tax rate	-	-5,579
	-3,807	15,114
Total reported tax in the Parent Company	-7,020	15,114
Reconciliation of effective tax rate	2009
---	---	---
Profit before tax		-97,743
Tax according to applicable tax rate in Parent Company	26.3%	25,706
Non-deductible/non-taxable items	2.1%	2,097
Adjustment in deferred tax from previous years	0.0%	-
Changes in loss carryforwards without corresponding capitalization in deferred tax	-135.5%	-34,824
Effect of changed corporate tax rate	0.0%	-
Other	0.0%	-
Reported effective tax	-7.18%	-7,020
Tax items recognized directly in equity	2009	2008
---	---	---
Foreign exchange differences on foreign currencies	661	-2,497
Other	2,552
	3,213	-2,497

66 MICRONIC ANNUAL REPORT 2009

Note 1B, cont'd.

	2009		2008
Reported deferred tax assets and liabilities	Deferred tax assets	Deferred tax liabilities	Deferred tax assets	Deferred tax liabilities
Tangible assets	551	–	551	–
Inventories	5,273	–	17,824	–
Accrued expenses	–	–	195	–
Accumulated tax loss carryforwards	75,792	–	66,854	–
Deferred tax assets/liabilities	81,616	–	85,424	–
Changes in deferred tax	Opening balance January 1, 2009	Recognized in profit and loss	Recognized in equity	Closing balance December 31, 2009
---	---	---	---	---
Tangible assets	551	–	–	551
Inventories	17,824	–12,551	–	5,273
Accrued expenses	195	–195	–	–
Tax loss carryforwards	66,854	8,939	–	75,793
	85,424	–3,807	–	81,616

MICRONIC ANNUAL REPORT 2009

NOTE 19. INTANGIBLE ASSETS

Group	Business system		Development costs		Technology		License
	2009	2008	2009	2008	2009	2008	2009	2008
Accumulated cost
Opening balance at January 1	20,003	20,003	577,046	505,161	–	–	17,084	17,084
Excess values attributable to business combinations	–	–	–	–	23,000	–	–	–
Investments attributable to business combinations	–	–	141,909	–	–	–	–	–
Costs incurred during the year	1,964	–	1,412	71,885	–	–	–	–
Closing balance, accumulated cost at December 31	21,967	20,003	720,367	577,046	23,000	–	17,084	17,084
Accumulated amortization
Opening balance at January 1	–18,367	–16,711	–451,878	–427,657	–	–	–17,084	–13,951
Amortization attributable to business combinations	–	–	–71,711	–	–	–	–	–
The year’s amortization	–1,436	–1,656	–63,791	–24,221	–2,300	–	–	–3,132
Closing balance, accumulated amortization at December 31	–19,803	–18,367	–587,380	–451,878	–2,300	–	–17,084	–17,084
Closing balance, residual value at December 31	2,164	1,636	132,987	125,168	20,700	–	–	–
Group	Customer relationships		Brand		Goodwill		Total
---	---	---	---	---	---	---	---	---
	2009	2008	2009	2008	2009	2008	2009	2008
Accumulated cost
Opening balance at January 1	–	–	–	–	–	–	614,133	542,248
Excess values attributable to business combinations	13,000	–	20,000	–	64,344	–	120,344	–
Investments attributable to business combinations	–	–	–	–	–	–	141,909	–
Costs incurred during the year	–	–	–	–	–	–	3,376	71,885
Closing balance, accumulated cost at December 31	13,000	–	20,000	–	64,344	–	879,762	614,133
Accumulated amortization
Opening balance at January 1	–	–	–	–	–	–	–487,329	–458,320
Amortization attributable to business combinations	–	–	–	–	–	–	–71,711	–
The year’s amortization	–929	–	–	–	–	–	–68,456	–29,009
Closing balance, accumulated amortization at December 31	–929	–	–	–	–	–	–627,496	–487,329
Closing balance, residual value at December 31	12,071	–	20,000	–	64,344	–	252,266	126,804

The investment in a business system refers to costs incurred for adaptation and implementation of a fully integrated business information system. Capitalized costs include both internally produced and externally acquired assets.

An individual assessment has been made of all ongoing research and development projects. Development costs that meet the criteria for capitalization are recognized in intangible assets. Capitalized costs consists of internally produced assets.

The externally acquired license refers to the right to exploit knowhow in maskless lithography, and relates to patent rights under the agreement with the Fraunhofer Institute for Microelectronic Circuits and System (IMS).

Starting in 2003, license fees are also paid to Fraunhofer, see Note 34.

During 2009 the acquisition of MYDATA has led to the recognition of assets attributable to excess values, see Note 6.

Information about depreciation/amortization by function is provided in Note 9.

68 MICRONIC ANNUAL REPORT 2009

Note 19, cont'd.

Impairment testing of intangible assets

In connection with the acquisition of MYDATA, excess values were identified in the company's technology, brand, customer relationships, order book, inventories and goodwill.

The excess values in inventories and the order book were amortized in full during 2009. The excess values in technology and customer relationships have estimated useful lives of five and seven years, respectively, and will be amortized over these periods.

However, the excess values in the brand and goodwill with indefinite useful lives are determined through impairment testing at the company level based on the unit's value in use.

Impairment testing of goodwill and brands with indefinite useful lives

Micronic Laser Systems tests the reported value of goodwill and brands with indefinite useful lives for impairment at least annually, in connection with the annual accounts. Aside from this annual review, an assessment is made to determine if there is any indication of impairment at each reporting date, i.e. quarterly.

The reported values of goodwill and brands with indefinite useful lives are presented below. These refer entirely to the cash-generating unit MYDATA which was acquired on July 2, 2009. The cash-generating unit's recoverable value is based on value in use, which is in turn based on cash flow forecasts for a period of five years forward.

The cash flow forecasts are based on the management's business plans for the SMT business area (MYDATA). The most important assumptions in these forecasts relate to volumes and margins, operating profit, operating capital, capital expenditure and discount factors. The business plans are based on historical experience, anticipated changes in the market and the management's assessment of the specific market segments. Assumptions about the growth rate are also based on the market outlook in the market segment in question. During the forecast period, the growth rate is expected to fluctuate during the first two years, mainly as a result of the new product portfolio that was introduced in 2009 and is expected to show strong growth within a span of two years. A more stable growth rate is awaited in the second part of the forecast period.

After the forecast period, the expected growth rate is 2.5 percent. The discount factor used to determine recoverable value is 12.5 percent after tax. Because the recoverable value thus calculated exceeds the carrying amount, no indication of impairment has been reported. A decrease in the discount factor has a positive effect on calculation of the recoverable amounts.

Allocation of intangible assets with indefinite useful lives	2009	2008
Cash-generating unit
Goodwill
Pattern generators	-	-
SMT	64,344	-
	64,344	-
Brand
Pattern generators	-	-
SMT	20,000	-
	20,000	-
Parent Company	Business system
---	---	---
	2009	2008
Accumulated cost
Opening balance at January 1	20,003	20,003
Costs incurred during the year	1,964	-
Closing balance, accumulated cost at December 31	21,967	20,003
Accumulated amortization
Opening balance at January 1	-18,367	-16,711
The year's amortization	-1,436	-1,656
Closing balance, accumulated amortization at December 31	-19,803	-18,367
Closing balance, residual value at December 31	2,164	1,636

Information about depreciation/amortization by function is provided in Note 9.

MICRONIC ANNUAL REPORT 2009

NOTE 20. TANGIBLE ASSETS

Group	Buildings and land		Machinery and equipment		Construction in progress		Total
	2009	2008	2009	2008	2009	2008	2009	2008
Accumulated cost
Opening balance at January 1	–	133,960	394,528	427,070	284	1,147	394,812	562,177
Investments attributable to business combinations		–	22,990	–	–	–	22,990	–
Purchases		4,323	2,134	4,090	1,400	68	3,534	8,481
Reclassification to equipment		–	284	931	–284	–931	–	–
Reclassification to products in progress		–	–19,612	–36,800	–	–	–19,612	–36,800
Reclassification from component inventory		–	1,948	–	–	–	1,948	0
Historical cost of sold/scrapped equipment		–138,288	–38,153	–12,213	–	–	–38,153	–150,501
Adjustment for classification of permanent equipment under IAS 16		–	–	7,090	–	–	–	7,090
Initial adjustment for transition to reporting under IAS 16		5	–	–	–	–	–	5
The year’s foreign exchange differences		–	–1,320	4,360	–	–	–1,320	4,360
Closing balance, accumulated cost at December 31	–	–	362,799	394,528	1,400	284	364,200	394,812
Accumulated depreciation
Opening balance at January 1	–	–30,738	–308,909	–285,081	–	–	–308,909	–315,819
Acc. depreciation at June 30 through business combinations		–	–15,621	–	–	–	–15,621	–
Depreciation of reclassification to products in progress		–	10,460	17,886	–	–	10,460	17,886
Depreciation of sold/scrapped equipment		34,201	37,915	5,713	–	–	37,915	39,914
Adjustment for classification of permanent equipment under IAS 16		–	–	–7,090	–	–	–	–7,090
Initial adjustment for transition to reporting under IAS 16		–5	–	–	–	–	–	–5
The year’s depreciation		–3,458	–28,986	–40,337	–	–	–28,986	–43,795
Closing balance, accumulated depreciation at December 31	–	–	–305,141	–308,909	–	–	–305,141	–308,910
Closing balance, residual value at December 31	–	–	57,659	85,620	1,400	284	59,059	85,904

Equipment has been reclassified to products in progress for a value of SEK 20 million (37).

Parent Company	Buildings and land		Machinery and equipment		Construction in progress		Total
	2009	2008	2009	2008	2009	2008	2009	2008
Accumulated cost
Opening balance 1 January	–	132,726	287,575	318,779	284	1,147	287,859	452,652
Purchases		4,323	1,303	9,788	1,400	68	2,703	14,179
Reclassification to equipment		–	284	931	–284	–931	–	–
Reclassification from component inventory		–	1,948		–	–	1,948	–
Reclassification to products in progress		–	–19,612	–36,800	–	–	–19,612	–36,800
Historical cost of sold/scrapped equipment		–138,288	–37,939	–12,213	–	–	–37,939	–150,501
Adjustment for classification of permanent equipment under IAS 16		–	–	7,090	–	–	–	7,090
Initial adjustment for transition to reporting under IAS 16		1,239	–	–	–	–	–	1,239
Closing balance, accumulated cost at December 31	–	–	233,559	287,575	1,400	284	234,959	287,859
Accumulated depreciation
Opening balance at January 1	–	–29,504	–208,965	–189,695	–	–	–208,965	–219,199
Depreciation of reclassification to products in progress		–	10,460	17,886	–	–	10,460	17,886
Depreciation of sold/scrapped equipment		34,201	37,866	5,713	–	–	37,866	39,914
Adjustment for classification of permanent equipment under IAS 16		–	–	–7,090	–	–	–	–7,090
Initial adjustment for transition to reporting under IAS 16		–1,239	–	–	–	–	–	–1,239
The year’s depreciation		–3,458	–26,739	–35,779	–	–	–26,739	–39,237
Closing balance, accumulated depreciation at December 31	–	–	–187,378	–208,965	–	–	–187,378	–208,965
Closing balance, residual value at December 31	–	–	46,181	78,610	1,400	284	47,581	78,894

Equipment has been reclassified to products in progress for a value of SEK 20 million (37).

70 MICRONIC ANNUAL REPORT 2009

NOTE 21. PARTICIPATIONS IN GROUP COMPANIES

	PARENT COMPANY
	2009	2008
Opening balance, historical cost	27,084	27,084
Merger between Micronic Japan K.K. and MYDATA K.K.	800	-
Acquisition of MYDATA automation AB	319,819	-
Closing balance, accumulated cost	347,703	27,084
Opening balance, impairment	-2,407	-2,407
Closing balance, accumulated impairment	-2,407	-2,407
Closing balance, book value	345,296	24,677
Directly owned subsidiaries	Corp. ID no.	Domicile
---	---	---
Micronic Treasury AB	556501-0989	Täby
Micronic Japan K.K.	607215	Tokyo
Micronic Laser Systems, Inc.	94-3344558	Wilmington
Micronic Laser Systems Far East Ltd.	80271004	Taipei
Micronic Laser Systems Korea Co. Ltd.	134111-0136974	Anyang
MYDATA automation AB	556238-6739	Stockholm

Indirectly owned subsidiaries	Country
MYDATA automation S.A.S	France
MYDATA automation Ltd.	UK
MYDATA automation Inc.	USA
MYDATA automation Asia Pte Ltd.	Singapore
MYDATA automation B.V.	The Netherlands
Royonic Elektronik-Produktionsmaschinen GmbH	Germany
MYDATA automation Treasury AB	Sweden

NOTE 22. RECEIVABLES FROM GROUP COMPANIES

	PARENT COMPANY
	2009	2008
Opening balance, book value	33,507	26,209
Additions	-	7,298
Deductions	-4,106	-
Closing balance, book value	29,401	33,507

MICRONIC ANNUAL REPORT 2009

NOTE 23. OTHER NON-CURRENT RECEIVABLES

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Opening balance, book value	38,051	5,309	29,880	80
Additions through business combinations	5,083	–	–	–
Additions	793	34,966	–	32,000
Deductions	–6,127	–2,224	–2,200	–2,200
Closing balance, book value	37,800	38,051	27,680	29,880

Additions in the Parent Company consist of a deposit for future lease charges on the property that was sold in 2008. The deposit is interest-bearing and will be released over the term of the lease, which runs for 15 years. Aside from the above, additions in the Group refer mainly to deposits related to lease contracts in the Japanese subsidiary. All receivables are stated at nominal value. Deductions in 2009 refer to the released portion of the deposit for future lease charges.

NOTE 24. INVENTORIES

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Components	76,533	81,083	65,558	81,083
Spare parts	130,648	90,539	53,417	42,842
Finished goods	26,814	–	–	–
Products in progress	107,051	138,080	103,860	138,080
	341,046	309,702	222,835	262,005

Equipment has been reclassified from equipment to products in progress for a value of SEK 20 million (37). Inventory write-downs of SEK Mi xx + My 6 million (67) have been charged to consolidated operating profit and refer to impairment of components used in products that are no longer marketed and sold.

NOTE 25. OTHER RECEIVABLES

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
VAT receivable	11,445	4,333	3,369	4,333
Derivatives, non-hedge accounting	22,032	–	–	–
Advance payments to suppliers	549	736	549	736
Deposit for future lease charges	2,200	2,482	2,200	2,482
Other receivables	3,949	683	929	476
	40,175	8,234	7,047	8,027

NOTE 26. PREPAID EXPENSES AND ACCRUED INCOME

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Sales revenues	98,539	112,589	98,327	112,589
Cost of goods and services	947	268	947	268
Commission costs	48	1,976	48	1,976
Other	7,017	21,716	7,804	14,583
	106,551	136,549	107,126	129,416

NOTE 27. UNTAXED RESERVES/APPROPRIATIONS

	PARENT COMPANY
	2009	2008
Untaxed reserves
Opening balance, excess depreciation, machinery and equipment	–	5,451
The year's change	–	–5,451
Closing balance, excess depreciation	–	–

72 MICRONIC ANNUAL REPORT 2009

NOTE 28. INTEREST-BEARING LIABILITIES/LIABILITIES TO CREDIT INSTITUTIONS

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Non-current interest-bearing liabilities
Bank loans	3,926	5,916	–	–
Other interest-bearing liabilities	–	142,162	–	142,162
	3,926	148,078	–	142,162
Current interest-bearing liabilities
Current portion of bank loans	7,791	15,177	–	–
Bank overdraft facilities	7,032	–	–	–
	14,823	15,177	–	–
Total interest-bearing liabilities	18,749	163,254	–	142,162
Bank loans fall due for payment as follows:
Within one year	14,823	15,177	–	–
Between one and five years	3,926	5,916	–	–
Later than five years	–	–	–	–
	18,749	21,093	–	–
Other interest-bearing liabilities fall due as follows:
Within one year	–	–	–	–
Between one and five years	–	142,162	–	142,162
Later than five years	–	–	–	–
	–	142,162	–	142,162

Interest-bearing liabilities; contractual maturity structure, Group

	Nominal amount in original currency	Book value	Effective interest rate	Maturity date according to loan contract
				<1 year	1–5 years	Later than 5 years
Bank loans
JPY, fixed interest	149,350	11,717	1.59%	7,791	3,926	–
SEK, variable interest (bank overdraft facility)	7,032	7,032	2.96%	7,032	–	–
Total interest-bearing liabilities		18,749		14,823	3,926	–

Effect of change in interest rate on cash flow, Group

	Nominal amount in original currency	Book value	Effective interest rate	1% change in interest rate	Annual interest expense, actual	Annual interest expense with 1% increase
Bank loans
JPY, fixed interest	149,350	11,717	1.59%	2.59%	186	303
SEK, variable interest (bank overdraft facility)	7,032	7,032	2.96%	3.96%	208	278
Total interest-bearing liabilities		18,749			394	582

MICRONIC ANNUAL REPORT 2009

NOTE 29. NON-CURRENT PROVISIONS

	GROUP
	2009	2008
Employee benefits
Opening balance, book value	7,719	5,536
Additions through business combinations	951	-
The year's provision	-385	2,183
Closing balance, book value	8,285	7,719

In the Japanese and Korean subsidiaries, provisions are made for long-term employee benefits. On certain conditions, a lump-sum payment is made to employees when their employment is terminated, either due to retirement or when the employee leaves the company for some other reason. The liability is recognized at the highest possible value.

NOTE 31. ACCRUED EXPENSES AND DEFERRED INCOME

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Setup costs	207	3,909	207	3,909
Payroll and overhead costs	103,387	69,884	68,892	67,853
Commission costs	7,029	10,040	4,831	10,040
Other	61,429	44,774	23,570	32,337
	172,052	128,607	97,500	114,139

Accrued setup costs consist of the estimated remaining costs for setting up a system at a customer site. These costs are estimated on an individual basis. Costs for setup are easy to assess and are also small in relation to the value of the system as a whole. When setup is completed at the customer site, a warranty period begins and normally lasts for 12 months.

NOTE 33. PLEDGED ASSETS

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Collateral provided for liability items in the balance sheet
Liabilities to credit institutions
Floating charges	121,700	89,000	89,000	89,000
	121,700	89,000	89,000	89,000

NOTE 30. OTHER LIABILITIES

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Employee withholding tax	8,894	6,561	3,411	4,039
Derivatives, hedge accounting	-	9,688	-	-
Derivatives, non-hedge accounting	-	2,516	-	-
VAT	2,642	-	-	-
Other	6,527	3,598	2	7
	18,063	22,363	3,413	4,046

NOTE 32. WARRANTY PROVISIONS

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Warranty provisions
Opening balance, book value	18,852	13,031	18,852	13,031
Additions through business combinations	9,847	-	-	-
The year's provision	15,289	20,014	12,219	20,014
Utilized during the year	-15,348	-10,335	-12,625	-10,335
Unutilized reversed amount	-8,228	-3,858	-5,591	-3,858
Closing balance, book value	20,412	18,852	12,855	18,852

Accrued warranty costs include the estimated remaining costs for warranty commitments. These costs are estimated on an individual basis for each system that is shipped to a customer. A provision for warranty commitments is made in connection with revenue recognition.

NOTE 34. CONTINGENT LIABILITIES

	GROUP		PARENT COMPANY
	2009	2008	2009	2008
Future payment obligations to joint ventures	6,504	98,420	4,141	98,420
	6,504	98,420	4,141	98,420
of which, falling due:
within one year	4,410	16,403	3,106	16,403
between one and five years	2,094	32,807	1,035	32,807
later than five years	-	49,210	-	49,210
	6,504	98,420	4,141	98,420

Under an agreement with the Fraunhofer Institute for Microelectronic Circuits and Systems (IMS) for future collaboration in development of the SLM technology, there are future payment obligations conditional on the fulfillment of a number of considerations.

74 MICRONIC ANNUAL REPORT 2009

NOTE 35. TRADE RECEIVABLES, IMPAIRMENT, AGE ANALYSIS AND OTHER INFORMATION

	GROUP
	2009		2008
	Gross	Impairment	Gross	Impairment
Trade receivables not yet due	124,501	–	170,678	–
Overdue trade receivables 0–30 days	20,018	–	33,622	–
Overdue trade receivables >30–90 days	17,545	1,296	1,815	168
Overdue trade receivables >90–180 days	3,051	309	1,332	477
Overdue trade receivables >180 days	1,690	196	636	546
Overdue trade receivables >360 days	3,114	3,114	–	–
Total	169,919	4,915	208,083	1,191

In 2009 an impairment loss of SEK 658 thousand (140) was recognized in connection with a customer bankruptcy where there is no indication that the receivable can be recovered. Other financial assets refer to trade receivables with estimated good credit quality. Other than documentary credits and credit insurance in certain cases, no collateral is furnished.

NOTE 36. FINANCIAL ASSETS AND LIABILITIES

The following tables present the Group's financial assets and liabilities, stated at book and fair value and classified in the categories
- Derivatives, hedge accounting
- Derivatives, non-hedge accounting
- Loans and receivables
- Other liabilities

Fair value and carrying amount are recognized in the balance sheet according to the table below:
The fair value of interest-bearing liabilities is based on expected future cash flows of principal and interest payments, discounted to the current market interest rate on the balance sheet date. For this calculation, the company uses the swap rate at December 31, 2009. The applied interest rates are based on the remaining maturity of the respective loans until the coming interest conversion date.

Group 2009	Derivatives, hedge accounting	Derivatives, non-hedge accounting	Loans and receivables	Other liabilities	Total carrying amount	Total fair value
Trade receivables			165,004		165,004	165,004
Other receivables					–
Currency
SEK			181,889		181,889	181,889
USD		19,100	32,011		51,111	51,111
JPY			18,296		18,296	18,296
EUR		2,932	15,397		18 329	18 329
GBP			2,157		2,157	2,157
TWD			1,773		1,773	1,773
KRW			24,768		24,768	24,768
SGD			266		266	266
RMB			29		29	29
Total assets	–	22,032	441,590	–	463,622	463,622
Non-current interest-bearing liabilities
Non-current interest-bearing liabilities to credit institutions				3,926	3,926	3,926
Other non-current interest-bearing liabilities					–	–
Current interest-bearing liabilities
Liabilities to credit institutions				14,823	14,823	14,823
Trade payables				64,860	64,860	64,860
Other financial liabilities
Forward exchange contracts (cash flow hedges)				–	–	–
Other financial liabilities				2,802	2,802	2,802
Total liabilities	–	–	–	86,411	86,411	86,411
Recognized loss (change in value)	607	–	–	–	–	–

MICRONIC ANNUAL REPORT 2009

Note 36, cont'd.

Group 2008	Derivatives, hedge accounting	Derivatives, non-hedge accounting	Loans and receivables	Other liabilities	Total carrying amount	Total fair value
Trade receivables			206,892		206,892	206,892
Other receivables					–
Currency					–
SEK			162,591		162,591	162,591
USD			5,350		5,350	5,350
JPY			39,465		39,465	39,465
EUR			146,037		146,037	146,037
TWD			1,747		1,747	1,747
KRW			16,156		16,156	16,156
RMB			38		38	38
Total assets	–	–	578,276	–	578,276	578,276
Non-current interest-bearing liabilities
Non-current interest-bearing liabilities to credit institutions				5,916	5,916	5,916
Other non-current interest-bearing liabilities				142,162	142,162	142,162
Current interest-bearing liabilities
Liabilities to credit institutions				15,177	15,177	15,177
Trade payables				20,178	20,178	20,178
Other financial liabilities
Forward exchange contracts (cash flow hedges)	9,688	2,516			12,204	12,204
Other financial liabilities				807	807	807
Total liabilities	9,688	2,516	–	184,240	196,444	196,444
Recognized loss (change in value)	13,404	–	–	–	–	–

The Group's holdings of foreign exchange contracts at December 31, 2009, can be broken down into the following underlying amounts and maturities.

Outstanding foreign exchange contracts at December 31, 2009

	Currency	Amount, thousand	Maturity		Currency	Amount, thousand	Maturity
EUR, sold	EUR	2,850	Q1-10	USD, sold	USD	7,650	Q1-10
EUR, sold	EUR	2,600	Q2-10	USD, sold	USD	8,700	Q2-10
EUR, sold	EUR	2,400	Q3-10	USD, sold	USD	9,600	Q3-10
EUR, sold	EUR	2,300	Q4-10	USD, sold	USD	3,500	Q4-10
Total		10,150		Total		29,450

A description of the Group's risks and risk management is provided in the report of the directors.

Risk management

76 MICRONIC ANNUAL REPORT 2009

Note 36, cont'd.

Financial liabilities, maturity structure, Group
Group 2009

	Currency	Nominal amount in original currency	Total, SEK thousand	Within 1 month	1–3 months	3 months–1 year	1–5 years	5 years and later
Bank loans
Bank loans	JPY	149,350	11,717		1,948	5,843	3,926
Bank overdraft facilities	SEK	7,032	7,032		7,032
Trade payables
Trade payables	SEK	46,662	46,662	37,961	8,701
Trade payables	EUR	710	7,347	5,901	1,445
Trade payables	JPY	40,544	3,181	1,089	1,993	99
Trade payables	USD	916	6,603	6,499	104
Trade payables	GBP	72	825	825
Trade payables	SGD	5	25	25
Trade payables	CZK	554	217	217
Other financial liabilities
Other interest-bearing liabilities
Other financial liabilities	JPY	35,712	2,802		2,802
Total			86,411	52,517	24,025	5,942	3,926	-

At year-end 2009, the balance sheet item "cash and cash equivalents" consisted of bank balances. Granted unutilized bank overdraft facilities amount to SEK 52 million (25).

Financial liabilities, maturity structure, Group
Group 2008

	Currency	Nominal amount in original currency	Total, SEK thousand	Within 1 month	1–3 months	3 months–1 year	1–5 years	5 years and later
Bank loans
Bank loans	JPY	245,260	21,092			15,177	5,915
Trade payables
Trade payables	SEK	13,290	13,290	11,851	1,439
Trade payables	EUR	75	818	531	286
Trade payables	JPY	38,950	3,350	3,350
Trade payables	USD	351	2,721	2,721
Other financial liabilities
Other interest-bearing liabilities	EUR	13,000	142,162				142,162
Other financial liabilities	JPY	9,381	807		807
Total			184,240	18,453	2,532	15,177	148,077	-

At year-end 2009, the balance sheet item "cash and cash equivalents" consisted of bank balances. Granted unutilized bank overdraft facilities amount to SEK 25 million (25).

MICRONIC ANNUAL REPORT 2009

78 MICRONIC ANNUAL REPORT 2009

NOTE 37. SUBSEQUENT EVENTS

After the end of the financial year, no events have taken place in the Micronic Group, which have had, or are expected to have, a significant financial impact on the company.

NOTE 38. CAPITAL MANAGEMENT

The board of Micronic has established a financial goal for the company to maintain a good capital structure that ensures financial stability and provides a solid foundation for ongoing development of business operations. The Board of Directors oversees the Group's capital structure and financial management, approves matters related to acquisitions, investments and financing and continuously monitors the Group's exposure to financial risks.

Micronic has not paid dividends on any occasion, and has instead reinvested the generated profits mainly to finance ongoing development activities and thereby create growth for the company.

Micronic defines capital as shareholders' equity according to the balance sheet, SEK 1,047,154 million (888,576), less unrealized gains/losses in the hedge reserve that are recognized in other comprehensive income and share-based payments recognized directly in equity, SEK 1,036,287 million (882,436).

The Group's long-term goals have been to achieve an operating margin of more than 15 percent and an equity/assets ratio of more than 60 percent over a business cycle. In 2010 the executive management will evaluate the overall financial goals.

Neither the Parent Company nor any of the subsidiaries is subject to any external capital requirements.

MICRONIC ANNUAL REPORT 2009 79

Proposed disposition of accumulated deficit

The board of directors proposes that the Parent Company's accumulated deficit of SEK 220,450,683 be carried forward to new account.

Approval and adoption

As stated below, the annual report and consolidated annual report were approved for publication on February 22, 2010. The profit and loss accounts and balance sheets of the Parent Company and the Group will be put before the Annual General meeting for adoption on April 12, 2010.

Statement of assurance

The board of directors and the CEO hereby give their assurance that the annual report has been prepared in accordance with Generally Accepted Accounting Standards in Sweden and that the consolidated financial statements have been prepared in accordance with Regulation (EC) No. 1606/2002 of the European Parliament and of the Council of July 19, 2002, on the Application of International Accounting Standards. The annual report and the consolidated financial statements give a true and fair view of the financial position and performance of the Group and the Parent Company.

The report of the directors for the Group and the Parent Company gives a true and fair view of the business activities, financial position and results of operations of the Parent Company and the Group, and describes the significant risks and uncertainties to which the Parent Company and the Group companies are exposed.

Täby, February 22, 2010

Rune Glavare
Chairman

Göran Malm
Board member

Magnus Lindquist
Board member

Åke Svensson
Board member

Patrik Tigerschiöld
Board member

Lena Treschow Torell
Board member

Our audit report was submitted on February 22, 2010.

KPMG AB
Anders Malmeby
Authorized Public Accountant

AUDIT REPORT

To the annual meeting of the shareholders of
Micronic Laser Systems AB (publ.)
Corporate identity number 556351-2374

We have audited the annual accounts, the consolidated accounts, the accounting records and the administration of the board of directors and the managing director of Micronic Laser Systems AB (publ) for the year 2009. The board of directors and the managing director are responsible for these accounts and the administration of the company as well as for the application of the Annual Accounts Act when preparing the annual accounts and the application of international financial reporting standards IFRS as adopted by the EU and the Annual Accounts Act when preparing the consolidated accounts. Our responsibility is to express an opinion on the annual accounts, the consolidated accounts and the administration based on our audit.

We conducted our audit in accordance with generally accepted auditing standards in Sweden. These standards require that we plan and perform the audit to obtain high but not absolute assurance that the annual accounts and the consolidated accounts are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the accounts. An audit also includes assessing the accounting principles used and their application by the board of directors and significant estimates made by the board of directors and the managing director when preparing the annual accounts and consolidated accounts as well as evaluating the overall presentation of information in the

annual accounts and the consolidated accounts. As a basis for our opinion concerning discharge from liability, we examined significant decisions, actions taken and circumstances of the company in order to be able to determine the liability, if any, to the company of any board member or the managing director. We also examined whether any board members or the managing director has, in any other way, acted in contravention of the Companies Act, the Annual Accounts Act or the Articles of Association. We believe that our audit provides a reasonable basis for our opinion set out below..

The annual accounts have been prepared in accordance with the Annual Accounts Act and give a true and fair view of the company's financial position and results of operations in accordance with generally accepted accounting principles in Sweden. The consolidated accounts have been prepared in accordance with international financial reporting standards IFRS as adopted by the EU and the Annual Accounts Act and give a true and fair view of the group's financial position and results of operations. The statutory administration report is consistent with the other parts of the annual accounts and the consolidated accounts.

We recommend to the annual meeting of shareholders that the income statements and balance sheets of the Parent Company and the group be adopted, that the loss of the Parent Company be dealt with in accordance with the proposal in the statutory administration report and that the members of the board of directors and the managing director be discharged from liability for the financial year.

Stockholm, February 22, 2010
KPMG AB
Anders Malmeby
Authorized Public Accountant

MICRONIC ANNUAL REPORT 2009

OTHER INFORMATION

FINANCIAL CALENDER 2010

Interim report January–March, April 23.
Interim report January–June, July 9.
Interim report January–September, October 22.

FINANCIAL INFORMATION

The annual report will be sent to all registered shareholders during week 12, 2010.

All financial reports and press releases can be viewed on Micronic's web site www.micronic.se. It is also possible to subscribe for financial information and press releases via the web site or directly from Micronic.

NOTICE OF AGM

The Annual General Meeting (AGM) will be held at 5 p.m. on Monday, April 12, 2010, at Näsby Slott in Täby.

RIGHT TO PARTICIPATE

In order to participate in the AGM, shareholders must be entered in the share register maintained by Euroclear Sweden AB (previously VPC AB) not later than April 6, 2010, and must notify the company of their intention to participate in the AGM not later than 12 p.m. on April 8, 2010.

REGISTRATION

Shareholders can register by mail to Micronic Laser Systems AB (publ.), Box 3141, SE-183 03 Täby, Sweden, by telephone +46 (0)8-638 54 64 or by e-mail: [email protected]. The registration should include the shareholder's name, address, telephone number, personal or corporate identification number and registered shareholding.

NOMINEE SHARES

To be entitled to participate in the AGM, shareholders whose shares are held in the name of a nominee must temporarily re-register the shares in their own names with Euroclear Sweden AB. Shareholders must notify their nominees in good time prior to April 6, 2010, at which time such registration must be completed.

NOTICE TO ATTEND

No later than four weeks prior to the AGM, a notice to attend the AGM will be published in Svenska Dagbladet and be posted on the Post- och Inrikes Tidningar web service. and the notice to attend will also be posted on Micronic's web site www.micronic.se.

The annual report is in all respect a translation of the Swedish annual report prepared in accordance with Swedish laws and regulations. In the event of any differences between this translation and the Swedish original, the Swedish annual report shall have precedence.

Production: Micronic in association with Grayling & Citigate Norden AB. Illustrations: Mario Salutskij. Photographs: Paul Allan, Victor Brott, Johan Olsson, Jörgen Ulfsgård, Magnus Elgquist etc. Printing: Elanders, Falköping, 2010. Printed on environmentally friendly paper, lic.no. 341 123.

341 123
MICRONIC ANNUAL REPORT 2009

TECHNICAL GLOSSARY

FINANCIAL DEFINITIONS

AMEPD

Active Matrix Electrophoretic Display – built on a TFT back panel.

AMOLED

Active Matrix Organic Light-Emitting Diode – built on a TFT back panel.

Electronic packaging

The manufacturing step that packages a semiconductor chip so that it is protected and can be connected to other electronic components in electronic equipment.

G7, G8 and G10 plants

To increase efficiency, the trend among panel makers is to use larger and larger substrates when panels are manufactured. In a G10 plant can for example up 15 pieces of 42" displays be manufactured from one substrate, whereas the corresponding number for a G7 plant is 6 pieces.

Jet Printing

A technology to apply solder paste on the PCB without touching it.

LCD

Liquid Crystal Display. Most common types of flat panel displays use a so called liquid crystal to control the amount of light transmitted. There are two main types of LCDs: passive (PM-LCD) and active (TFT-LCD).

LED

Light Emitting Diodes. LEDs are for instance used as the light source in the thinnest LCDs.

Micron, μm

One millionth of a meter (10–6 m), or one thousandth of a millimeter.

Mura

A Japanese word that is used to describe irregularities or systematic defects in display panels. Although the defects are often so small that measurement is difficult or impractical, they are visible to the human eye.

Nanometer, nm

One billionth of a meter (10–9 m), or one millionth of a millimeter.

PDP

Plasma Display Panel, a type of flat panel display that can be manufactured very large (40–80 inches diagonally) and relatively thin (approx. 80 mm).

Photomask

A photomask can be described as a photo negative. The image on the negative is written with Micronic's pattern generator and then transferred to the customer's end product via a lithographic process. The photomask consists of a transparent substrate of glass or quartz that is covered with a thin layer of chrome and a film of photoresist, a light sensitive material that can be developed and washed away once it has been exposed. After writing, the photoresist is developed and the pattern is transferred to the chrome layer by etching.

Pick and Place

Term for automated machines that pick and place electronic components on a PCB.

PoP

Package on Package is a technology to increase the PCBs packing density. Electronic components are stacked upon each other, for example a memory chip is mounted directly on a processor.

PM-LCD

See LCD.

Semiconductor chip/component

An electronic component containing more than one circuit element on the same silicon chip, such as memories, processors and amplifiers.

SLM

Spatial Light Modulator, an electro optical device that uses an array of individually controlled micro mirrors on a silicon chip.

Solder paste

Material that creates electrical and mechanical connection between the PCB and its electronic components.

SMT

Surface Mount Technology. The technology that today dominates the production of electronics. The components are mounted directly on the PCB surface instead of being hole mounted.

Technology node

A generation of semiconductor manufacturing. The nodes are named based on the smallest feature or minimum spacing between features, for example 130 nm, 90 nm, and 65 nm. The later the generation, the smaller and faster the transistors and the more that can be placed on a single chip.

TFT-LCD

A TFT-LCD is an active LCD providing better image quality and faster response than a passive LCD. The standard technology for flat panel computer monitors, laptops and LCD-TVs. TFT-LCD is increasingly common in mobile phones. The active LCDs have a Thin Film Transistor (TFT) in each pixel.

Uptime

The time during when a system can be utilized for production.

Adjusted operating margin

Operating profit adjusted for capitalized development costs and amortization of previously capitalized development costs as a percentage of net sales.

Capital employed

Total assets reduced by non interest-bearing liabilities and deferred tax.

Capital turnover rate

Net sales divided by average capital employed.

Cash flow after investing activities before financing

Cash flow from operating activities and from changes in working capital less investments.

Cash flow from investing activities

Net capital investments in buildings, machinery and equipment as well as capitalized development costs and financial assets.

Cash flow from operating activities

Profit after financial items adjusted for non-cash items, income tax paid and changes in working capital.

Cash flow per share

Cash flow from operating activities divided by the average number of shares.

Dilution

A weighed average number of shares, affected by new issues of shares.

Earnings per share

Net profit divided by the average number of shares.

Equity per share

Equity divided by the average number of shares.

Equity/total assets

Equity as a percentage of total assets.

Gross margin

Gross profit as a percentage of net sales.

Net debt

Interest-bearing liabilities less cash and cash equivalents.

Operating margin

Operating profit as a percentage of net sales.

P/E ratio per share

Share price at December 31 divided by earnings per share.

Profit margin

Profit after financial items as a percentage of net sales.

R&D expenditure

Expenditure for R&D activities that has affected cash flow.

R&D expenses

Costs attributable to research and development activities including costs of personnel engaged in R&D work and amortization of previously capitalized development costs.

Return on capital employed

Profit after financial items plus financial expenses as a percentage of average capital employed.

Return on equity

Net profit as a percentage of average equity.

HEADQUARTERS

MICRONIC LASER SYSTEMS AB
MYDATA automation AB

Nytorpsvägen 9
Box 3141
183 03 Täby, Sweden
Tel: +46 8 638 52 00
Fax: +46 8 638 52 90
www.micronic.se
www.mydata.com

BENELUX

MYDATA automation B.V.
Eindhoven Airport
Flightforum 880
5657 DV, Netherlands
Tel: +31 402 62 06 67
Fax: +31 402 62 06 68

CHINA

Micronic Laser Systems AB
Shanghai Representative Office
29th Floor, Sino Life Tower,
707 Zhang Yang Road, Pudong,
Shanghai 200120, China
Tel: +86 215 835 8383
Fax: +86 215 835 8181

MYDATA automation, Shanghai
Block 4, No. 700 Gui Ping Road,
Cao He Jing Hi-Tech Park,
Shanghai 200233, China
Tel: +86 21 6485 5389
Fax: +86 21 6485 7208

MYDATA automation,
Dongguan
Shop 206, Dong Bao House,
Yee Hong Road,
Yee On Industrial City,
Yan Tian, Feng Gang Town,
Dongguan,
Guangdong, China
Tel: +86 769 8756 7313
Fax: +86 769 8756 8152

FRANCE

MYDATA automation S.A.
13 Rue de Norvège BP122
91944 Courtaboeuf Cedex,
France
Tel: +33 1 69 59 24 34
Fax: +33 1 69 28 71 00

GERMANY

MYDATA Royonic GmbH
Wächterhofstraße 50
85635 Höhenkirchen, Germany
Tel: +49 8102 749090
Fax: +49 8102 749098

JAPAN

Micronic Japan K.K.
MYDATA Division
Mitsugi-Kotobukicho Bldg.
1st floor
1-1-3, Kotobuki-cho, Fuchu-shi,
Tokyo 183-0056, Japan
Tel: +81 42 354 1334
Fax: +81 42 354 1335

SINGAPORE

MYDATA Asia Pte Ltd.
Asiawide Industrial Building
5 Pereira Road, #01-01
Singapore 368 025
Tel: +65 6281 7997
Fax: +65 6281 7667

SOUTH KOREA

Micronic Laser Systems Co., Ltd

9 Dong-A Plaza, 1608-4

Guanyang-Dong, Dongan-Gu
Anyang-si Gyeonnigi-Do,
South Korea (430-060)
Tel: +82 31 387 5111
Fax: +82 31 388 0087

TAIWAN, R.O.C.

Micronic Laser Systems Far East Co., Ltd.
2nd Floor #18 Pu-Ding Road,
Der-An Building, Hsin-Chu, 300,
Taiwan, R.O.C.
Tel: +886 3 564 6656
Fax: +886 3 564 6664

UK

MYDATA automation Ltd.
Unit 2, Concept Park
Innovation Close
Poole, Dorset, BH12 4QT,
England
Tel: +44 1202 723 585
Fax: +44 1202 723 269

USA

Micronic Laser Systems Inc.
1922 Zanker Road
San Jose, CA95112, USA
Tel: +1 408 392 2260
Fax: +1 408 392 2261

MYDATA automation, Inc.
320 Newburyport Turnpike
Rowley MA 01969-2002, USA
Tel: +1 978 948 6919
Fax: +1 978 948 6915

AI assistant

Mycronic — Annual Report 2009

2946_10-k_2020-07-23_c301701b-d7d1-4be3-b8dc-49dfbd308f51.pdf

Micronic

CONTENTS

OPERATIONS

FINANCIAL REPORTS

THE MICRONIC GROUP IN BRIEF

BUSINESS AREA PATTERN GENERATORS

FUNDAMENTAL MARKET DRIVERS FOR THE GROUP

MARKET POSITION

BUSINESS AREA SMT

MARKET POSITION

HIGHLIGHTS OF 2009

COMMENTS BY THE CEO

PREPARING FOR THE FUTURE

STRATEGIC FOCUS

NEW OPPORTUNITIES INSTILL CONFIDENCE IN THE FUTURE

THE SHARE

SHARE PRICE TREND

SHARE DATA AND TRADING

NON CASH ISSUE

OWNERSHIP STRUCTURE

EMPLOYEE STOCK OPTION PROGRAM

DIVIDEND POLICY

SHARE DATA

OWNERSHIP STRUCTURE AT DECEMBER 31, 2009

MICRONIC'S TEN LARGEST SHAREHOLDERS AT DECEMBER 31, 2009

ANALYSTS THAT CONTINUOUSLY MONITOR MICRONIC

STRATEGIC FOCUS

MERGER

BACKGROUND TO THE MERGER

THE MANUFACTURING PROCESS FLOW FOR ELECTRONICS

SYNERGIES

MERGER CREATES NEW OPPORTUNITIES

STRATEGIC FOCUS

THE GROUP'S GENERAL OPERATIONAL GOALS FOR 2010 ARE TO:

BUSINESS AREA PATTERN GENERATORS

OPERATIONS

MICROLITHOGRAPHY IS THE LINK BETWEEN DESIGN AND MASS PRODUCTION

OPERATIONAL GOALS FOR PATTERN GENERATORS IN 2010

THE DISPLAY MARKET

MARKET DRIVERS DISPLAY

DISPLAYS

DRIVING FORCES

TECHNOLOGY TRENDS

EFFECT ON MICRONIC

MARKET OUTLOOK DISPLAY

THE SEMICONDUCTOR MARKET

MARKET DRIVERS SEMICONDUCTOR

MARKET OUTLOOK SEMICONDUCTOR

SEMICONDUCTORS

DRIVING FORCES

TECHNOLOGY TRENDS

EFFECT ON MICRONIC

THE ELECTRONIC PACKAGING MARKET

ELECTRONIC PACKAGING

DRIVING FORCES

TECHNOLOGY TRENDS

EFFECT ON MICRONIC

MARKET DRIVERS ELECTRONIC PACKAGING

MARKET OUTLOOK ELECTRONIC PACKAGING

AFTER MARKET

PRODUCTS

RESEARCH AND DEVELOPMENT

PREXISION-10

LDI

PRODUCTION

OUTLOOK

BUSINESS AREA SURFACE MOUNT TECHNOLOGY EQUIPMENT

OPERATIONS

SURFACE MOUNTING IS THE LINK BETWEEN THE SEMICONDUCTOR INDUSTRY AND THE FINISHED PRODUCT.

OPERATIONAL GOALS FOR SMT EQUIPMENT IN 2010

THE MARKET FOR SMT EQUIPMENT

MARKET DRIVERS

MARKET OUTLOOK

SMT EQUIPMENT

DRIVING FORCES

TECHNOLOGY TRENDS

EFFECT ON MYDATA

Mycronic Annual Report 2009