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 July 1, 1999

Longmont’s Applied Films plants roots in China

LONGMONT — Applied Films Corp. (Nasdaq: AFCO) of Longmont has established a manufacturing facility in Suzhou, China, through a partnership with the world’s largest supplier of substrate glass for flat-panel displays, Nippon Sheet Glass Co. Ltd.

The expansion should help address the increasing demand for Applied Films’ products in Asia and bypass the overwhelming volume of exports directed to overseas clients.

“The liquid crystal display industry is growing by over 20 percent per year, and the industry is concentrated in Asia,´ said Thomas Edman, president of Applied Films. “The move to China is an attempt to bring ourselves closer to our customer base for thin-film coatings — 80 percent of which is in the Asian region.”

Edman added that savings on shipping costs and labor, as well as the proximity to NSG, also were key factors behind the decision.

Applied Films was founded in 1976 by Richard Condon, Cecil Van Alsburg and John Chapin, the inventor of the planar magnetron — a major breakthrough in the physical vapor deposition technology used by the thin-film industry. Van Alsburg served as chief executive of the company until 1998, when Edman took over.

Since its founding, Applied Films has grown to $53 million in revenues and made an initial public offering in November 1997. The company has had its ups and downs, Edman reported, but over the long haul has posted an average year-to-year increase in sales of 30 percent. The company ranks among the leading manufacturers within the thin-film coating equipment and coatings industries.

The new 80,000-square-foot facility in China opened April 1 and represents a substantial joint partnership with Osaka-based Nippon Sheet Glass Co. The companies’ partnership is formed around their respective contributions of NSG’s Suzhou coating line and Applied Films’ thin-film coating system, as well as the $3.2 million each contributed toward establishing the new manufacturing facility in Suzhou. The new company is called Suzhou NSG-AFC Thin Film Electronics Co. Ltd.

“We’re starting out with approximately 150 employees,” Edman said. “There are two coatings lines, one supplied by Applied Films and one supplied by our partners. We’re focusing on manufacturing alone, with the parent companies splitting the marketing responsibilities.”

The China move is not the first time Applied Films has sought advancement through partnering with another company. In 1992, Applied Films merged with Donnelly Corp. to increase its employee base from 10 to 92. Donnelly split from Applied Films in 1997, but nevertheless supplied an essential boost to Applied Films’ growth; today the company has approximately 160 employees in the United States.

“There are two issues,´ said Richard Beck, a member of Applied Films’ board of directors. “There’s manufacturing that’s more for the equipment side of the business, (and has a customer base more concentrated in the United States) and then there’s coatings. As far as coatings are concerned, it’s probably most economically prudent to reduce costs to be located near the source of supply and near the customers. That will benefit shareholders the most in the long run.”

“We’re developing a number of new markets in the U.S., including photovoltaics and touch-panel technologies, both of which require substantial volumes of thin films,” Edman said, asserting that while much of Applied Films’ business is in Asia, its headquarters will remain in Longmont, in the Del Camino area of Weld County.

“In the long term,” he added, “Asia is the bulk of our revenues, and the requirement that we service our customers from nearby is ongoing.”

“China was the 12th-largest high-tech export market in 1998, with sales exceeding $3 billion,” reported Tim Bennett, senior vice president international with the American Electronics Association.

Applied Films is among Colorado’s leaders in exporting and received the Governor’s Award for Excellence in Exporting in mid-May. With major markets in Japan, Taiwan, Hong Kong, China and Malaysia, the company hopes to be well-served by its new, centralized manufacturing location, as well as by a possible shift away from the region’s recent economic woes.

LONGMONT — Applied Films Corp. (Nasdaq: AFCO) of Longmont has established a manufacturing facility in Suzhou, China, through a partnership with the world’s largest supplier of substrate glass for flat-panel displays, Nippon Sheet Glass Co. Ltd.

The expansion should help address the increasing demand for Applied Films’ products in Asia and bypass the overwhelming volume of exports directed to overseas clients.

“The liquid crystal display industry is growing by over 20 percent per year, and the industry is concentrated in Asia,´ said Thomas Edman, president of Applied Films. “The move to China…

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