Untitled - Oerlikon Barmag

FINANCIAL HIGHLIGHTS 

Key data 

(EUR 000) 2005 2004 1) Change in % 

Orders 1 463 793 1 689 834 –13.4 

Sales 1 569 786 1 593 100 –1.5 

Operating profit 88 289 92 248 –4.3 

% of sales 5.6% 5.8% 

Profit from continuing operations 55 160 49 157 12.2 

% of sales 3.5% 3.1% 

Profit for the period 55 160 67 368 –18.1 

% of sales 3.5% 4.2% 

Depreciation and amortization 63 918 73 124 –12.6 

% of sales 4.1% 4.6% 

EBITDA 152 207 165 372 -8.0 

Cash flow from operating activities 71 464 163 174 –56.2 

% of sales 4.6% 10.2% 

Capital expenditure 78 301 59 126 32.4 

Employees (full-time equivalents at year-end) 2) 10 021 8 852 13.2 

Total assets 1 265 079 1 300 901 –2.8 

Total shareholders‘ equity 574 976 516 725 11.3 

% equity financing 45.5% 39.7% 

Stock market capitalization (year-end) 811 825 617 544 31.5 

Share summary (EUR) 

Shareholders‘ equity per share 39.05 36.08 

Earnings per share 3.72 4.71 

Cash flow from operating activities 4.98 11.52 

Share summary (CHF) 

Shareholders‘ equity per share 60.73 55.74 

Earnings per share 5.76 7.27 

Cash flow from operating activities 7.71 17.79 

Capital repayment 3) 1.80 2.00 

1) Data for 2004 is restated to take account of Share-based Payment and Discontinued Operations. 

2) 2005: including 1 369 from acquisitions made in 2005. 

3) For 2005: proposal of the Board of Directors to the General Meeting of Shareholders.

INDEX 

002 / THE BUSINESS YEAR 2005 

032 / FINANCIAL REPORT 2005 

043 / CONSOLIDATED FINANCIAL STATEMENTS 

073 / MULTIPLE YEAR COMPARISON 

079 / THE FINANCIAL REPORT OF SAURER LTD. 

086 / CORPORATE GOVERNANCE 

103 / ADDRESSES WORLDWIDE 

109 / SHARE STATISTICS

PAGE 2 

The Business Year 2005 

THE BUSINESS YEAR 2005 


Dear Shareholders, 

In 2005, Saurer’s business maintained a level similar to that 

of the previous year. Gradual growth continued in Transmis- 

sion Systems but was accompanied by declining volumes in 

the textile sector, caused mainly by weaker demand from 

China as expected. The business efficiency program TEMPUS 

was concluded, exceeding expectations and enabling cost 

savings of over EUR 50m, and alongside this, some important 

foundations were laid for Saurer’s growth in the next years. 

These derived from a step change in Saurer’s priorities. Out 

of the strong focus on business processes, the supply chain 

and cost reductions to minimize our exposure to cyclical 

business downturns (TEMPUS) came a series of projects in all 

business units to exploit new business opportunities with 

maximum energy and efficiency. This included significant in- 

vestments in development of new products, new production 

and sales structures in Asia, the acquisition of Fairfield, long- 

sought-after complement to Graziano, and a number of 

smaller technology companies acquired in the textile sector. 

Once they are fully integrated, these acquisitions collectively 

will have a sales potential of over EUR 300m with an above 

average profit contribution. 

However, even the very significant fixed cost reductions from 

the TEMPUS program – EUR 50m over the last two years – 

were not enough to compensate for the loss of margins 

caused by lower sales, the unfavorable product and country 

mix, the startup costs of the growth program and the ab- 

sence of last year’s non-recurring income. 

In 2005 Saurer’s order intake reached EUR 1 464m (–13% 

compared with EUR 1 690m in 2004). Sales were EUR 1 570m 

(–1.5% compared with EUR 1 593m in 2004). The decline in 

orders compared with a strong prior year is mainly due to re- 

duced demand from China in the Textile Solutions division. 

Orders and sales in Transmission Systems rose slightly, but 

not enough to compensate for the decline in Textile Solutions. 

Acquisitions contributed only EUR 42m to sales (EUR 41m to 

orders) in 2005. Saurer’s orders on hand as at December 31, 

2005, EUR 392m, are 15% below the year-end figure of 

2004. 

The net profit of the period of EUR 55m exceeded that of 

the previous year by EUR 6m (+12%) for continuing 

operations (prior year EUR 49m plus EUR 18m from the 

divested Surface Technology). This was achieved by the cost 

reductions of the TEMPUS program combined with an 

improved financial result, lower taxes and the absence of 

goodwill amortization in 2005. The operating profit 

(earnings before interest and tax) was EUR 88m (prior year 

EUR 92m plus EUR 19m from Surface Technology), which 

corresponds to a margin of 5.6% on sales. The RONOA 

(return on net operating assets) was 19.3% (prior year 

22.5%). The EBITDA (earnings before interest, tax, deprecia- 

tion and amortization) reached EUR 152m (10% of sales; 

prior year EUR 165m plus EUR 21m from Surface Tech- 

nology). Cash flow from operating activities amounted to 

EUR 71m, and net cash at the year-end was EUR 112m (prior 

year EUR 141m). The reduction in net cash is due partly to 

liquidity requirements for the recent acquisitions (EUR – 48m) 

and partly to the reversal of excess liquidity at the end of 

2004, in customer prepayments and creditor balances 

(EUR –35m). The acquisition of Fairfield Manufacturing Inc. 

has not reduced liquidity until January 2006. 

As previously announced, capital expenditure for ongoing 

operations rose by EUR 19m over the previous year, to a 

total of EUR 78m. Of this, EUR 50m were invested in the 

Textile Solutions division and EUR 28m in Transmission 

Systems. In both cases the funds were applied mainly to 

building up our activities in Asia, and to tooling up for 

manufacture of new products. In Textile Solutions, the 

capital requirement is expected to decrease somewhat 

again.

46 

2003 

49 

2004 

55 

2005 

Profit for the period 2003–2005 

in EUR m (continuing operations) 

2001 

-208 

THE BUSINESS YEAR 2005 PAGE 3 

Saurer net cash (debt) 2001–2005 

in EUR m 

2003 

-32 

2004 141 

2005 112 

The Business Year 2005

PAGE 4 



TRANSMISSION SYSTEMS – CONSOLIDATION 

COMPLETED, PROMISING NEW PRODUCTS IN THE 

PIPELINE AND DYNAMIC NEW GROWTH WITH THE 

ACQUISITION OF FAIRFIELD 

Transmission Systems (Graziano Trasmissioni) confirmed and 

continued its sales growth of the second half of 2004, which 

led to a clear improvement in the first half of 2005 and in 

the second half a repeat of the high volumes seen in the 

previous year. In total, orders and sales rose by 4% to EUR 

397m, after 6% growth in the previous year. 

The higher sales volumes in agricultural and construction 

vehicles, which make up more than half of Transmission 

Systems’ business, continued into 2005. In the automobile 

sector demand stabilized at the level of the second half-year 

2004. Further growth came from the production runup for 

various new products such as the Aston Martin DB9 and the 

Volkswagen T5 Transporter. In 2005 Graziano Trasmissioni 

also received order commitments for a large number of new 

products which will form a basis for future growth, but 

which also put great pressure on the company’s develop- 

ment and prototyping resources. These projects included 

among others the rear differential for the Maserati Quattro- 

porte, the gearbox for the Audi Le Mans which will come 

onto the market at the end of 2006, the gearbox for the 

new Ferrari 599 – the successor model to the Maranello 

575 –, the front power take-off unit for the new Epsilon 

worldwide all-wheel drive platform by General Motors, new 

components for Triumph motorcycles, and gearboxes for var- 

ious low-volume luxury sports cars. These new orders will 

further strengthen Graziano Trasmissioni’s already strong 

position in the supply market for luxury sports vehicles and 

high-quality all-wheel drive components. In the area of agri- 

cultural and construction vehicles also some important new 

projects are being pursued where Graziano is treading new 

ground in technology, such as CVT (Continuous Variable 

Transmission) for small tractors, variable double-clutch trans- 

missions for tractors, axles for the new family of CNH motor 

graders, and axles for a new series of light wheel loaders 

by JCB. 

The consolidation phase of Graziano Trasmissioni was sub- 

stantially concluded in 2005, leading to closure of the Carr 

Hill (GB) plant and transfer of its production to the plant in 

India and to Italy. A future increase in production capacity in 

India was initiated with work starting on an extension to the 

plant which will come into operation in the third quarter 

2006. A start was made on the transfer of operations for the 

European market to the existing plant of Saurer Textile 

Solutions in the Czech Republic, with a view to starting 

production there from mid-2006. In December the Graziano 

building on the site of the new Saurer plant in Suzhou (China) 

was opened for business. Its first product will be axles for 

fork-lift trucks by Linde, destined for the Chinese market. 

Apart from business know-how in general, these moves to 

China and the Czech Republic show how Graziano can be- 

nefit substantially from the management experience and 

infrastructure of Saurer Textile division. 

The operating profit of Graziano Trasmissioni, EUR 31.5m 

(7.9% of sales) clearly exceeds that of the previous year 

(EUR 22.2m), which was still charged with EUR 6m of re- 

structuring cost. However, despite a great improvement in 

difficult market conditions, the operating result is still below 

our target for such a capital-intensive business. Price pressure 

from customers and greatly increased steel and energy costs 

must be met in future by increased use of low-cost produc- 

tion sources such as the Czech Republic and India, where fa- 

cilities are currently under construction. The TEMPUS project 

is well advanced in Transmission Systems and has already 

made a significant contribution to the problems of output 

price contention and rising input costs. 

Fairfield: the perfect strategic complement. For over two 

years Saurer has examined the market of transmission manu- 

facturers very systematically, looking for a suitable comple- 

mentary partner for Graziano. Important criteria for such a 

partner were: 

• Specialities provider with complementary products to 

those of Graziano Trasmissioni 

• in NAFTA or Asia 

• sales in excess of EUR 100m 

• demonstrable EBITA return of over 15% on the 

acquisition price after integration, no dilution of RONOA 

(return on net operating assets) 

At the end of 2006 Saurer acquired 100% of the share 

capital of Fairfield Manufacturing Company, Inc. In 2005 

Fairfield had sales of around USD 230m, 1 650 employees 

(thereof 600 in India) and achieved a net profit of over 7%.

The company’s headquarters and largest production facility 

are in Lafayette, IN, USA, and Fairfield also has a manu- 

facturing presence in Belgaum, India. 

Fairfield’s most important products are planetary gear drives 

(under the Torque Hub ® trade name), custom gears (predom- 

inately large diameter gears), and customgear assemblies. 

Primary end markets which rely on the Torque Hub ® plane- 

tary gear drive include aerial work platforms and offshore 

platforms, agricultural and road construction equipment. 

Custom gear end-market applications include rail, mining, 

agricultural, construction, offshore platforms and material 

handling. Custom gear assemblies are utilized for numerous 

speciality applications including track drives, power takeoffs, 

pump drives, and drop boxes for defence, oil and energy, 

underground and aboveground mining and agricultural 

applications. 

Fairfield’s customer base includes many well-recognized in- 

dustrial companies, including AGCO, Allison Transmission, 

Case New Holland, Caterpillar, Electro Motive Diesel, Gen- 

eral Electric, John Deere, JLG, Joy Global, SPX and Terex. 

Many of them are long-standing customers of Graziano Tras- 

missioni. 

The combination of Fairfield and Graziano Trasmissioni cre- 

ates a globally leading solution provider for speciality trans- 

missions and gears. Fairfield adds attractive specialities to 

Saurer’s product portfolio, grants access to new applications, 

provides Graziano a manufacturing footprint in the NAFTA 

region, and offers better access to U.S. customers. In return, 

Graziano and Saurer provide a platform for Fairfield to further 

penetrate the European market. In addition to the synergies 

that are created in Europe and North America, the combined 

business will be in a stronger position to exploit market op- 

portunities and production bases in China and India. 

EBIT 


16% 

AMERICA 

2003 

79% 

EUROPE 

2004 

5% 

ASIA 

Worldwide sales distribution 2005 

Transmission Systems 

363 

384 

397 

2005 

28.6 22.2 31.5 

MARGIN 7.9% 5.8% 7.9% 

Sales 2003–2005 

Transmission Systems in EUR m 


PAGE 6 



TEXTILE SOLUTIONS – STRONG MARKET POSITION 

IN ASIA AND ACQUISITIONS TO STRENGTHEN 

PRODUCT PORTFOLIO 

In Textile Solutions the order intake for 2005, EUR 1 067m, 

was below the high level of the previous year (EUR 1 306m, 

–18%). The main reason for this was the decline in demand 

from China, principally for major projects for filament instal- 

lations, texturing and synthetic staple fibers – a decline 

which first became apparent in the second half of 2004. 

Sales for the year were EUR 1 173m, 3% below the previous 

year’s sales of EUR 1 209m. Our Chinese customers’ uncer- 

tainty in reaction to the trade disputes surrounding textile 

imports in the first half of 2005, together with the high in- 

vestment levels of earlier years and the government’s 

attempts to restrain the economy (soft landing), all had a 

bad effect on investment in textile machinery. In the second 

half of 2005 sales of EUR 615m were achieved, almost the 

level of the previous year (EUR 621m). In total, Asian markets 

continued to dominate in the textile sector with 67% of 

sales, however, in 2005 only 28% came from China compared 

with 38% in the previous year. In an encouraging contrast, 

the Indian market appears to be in continuing good health. 

The individual business areas within Textile Solutions devel- 

oped very differently; the record volumes of winding systems 

(cotton) contrasted sharply with extremely low sales of 

texturing machines. 

Saurer’s rapid adaptation to changes in the demand profile 

demonstrates our capability to react in quick response to 

market dynamics. Particularly important in this connection 

are our local teams of well-trained service engineers and 

product specialists in India and China, who can now be de- 

ployed anywhere in the world. Although it has improved 

slightly, the performance of the service, repair and spare 

parts business in Asia is still well behind expectations based 

on comparable volumes in other markets. Following the ac- 

quisition in 2005 of the component companies Heberlein 

Fiber Technology and Temco, this important area will benefit 

from an increased product range and a stronger presence in 

the market. 

Lower sales, significant preparatory costs of just over EUR 

6m in our growth program MUSANGALA and an unsatisfac- 

tory product/country mix led to a lower operating result for 

Textile Solutions of EUR 63m, which represents a margin of 

5.4% on sales (prior year EUR 76m, 6.3%). The result for 

the year benefited from cost reductions from the TEMPUS 

program and from greatly increased value added in Asia, 

however, these were not sufficient to compensate for the 

other negative factors. The new assets of the acquisitions 

contributed only a little to sales and earnings, yet a RONOA 

for the division as a whole of 25% (prior year 35%) was 

achieved and the average capital turn was further improved. 

Successful management of capital employed, besides 

operating profit, has proved its value in recent years as a 

major element of Senior Management compensation. 

However, although we can explain it, such a result is unsatis- 

factory and shows the gap which our growth program must 

close in the next two years if we are to achieve our target of 

8% recurring operating profit. 

In 2005 we acquired seven textile-technology companies, 

operating in the areas of nonwovens, textile machine com- 

ponents and recycling. These companies’ total sales for 2005 

were approximately EUR 112m, of which EUR 42m were 

consolidated in 2005, and in future they will contribute sig- 

nificantly to our growth in Textile Solutions. 

Acquired companies Business Area Saurer Business Unit 

Autefa Nonwovens Neumag 

Kortec Nonwovens Neumag 

Fehrer Nonwovens Neumag 

Ermafa Plastics recycling Barmag Spinning Systems 

Heberlein Fiber Technology Textile machine components Components 

Fincarde Nonwovens Neumag 

Jinsheng Staple fiber spinning Jinsheng 

Temco (2006) Textile machine components Components

Leader in total solutions and innovation. In recent years, 

Saurer has repeatedly secured its market leadership in ma- 

chinery and equipment for yarn production, and today we 

offer a broader range of applications than any of our com- 

petitors. Our new acquisitions will strengthen this capability 

further. We see significant advantages and opportunities de- 

riving from this: 

• Saurer’s diversified market segments with their different 

cycles smooth out the volatility of the individual seg- 

ments, so that business years with extreme downturns 

are less frequent. 

.• Saurer’s profound and comprehensive understanding of 

yarn production qualifies us to adopt and develop our 

role as provider of total solutions. 

• Saurer’s broad knowledge of development and engineer- 

ing puts us in a strong position to bring new technologies 

to the point of breakthrough, including difficult and ex- 

pensive technologies. Building on our product leadership 

we can differentiate ourselves from our competitors and 

secure our market share. 

• Saurer’s experience in our individual business units of 

building up and managing production and sales units in 

China and in India allow us to exploit business opportunities 

in Asia intensively. 

• Saurer’s decentralized worldwide sales and service orga- 

nization, together with our hard-learned knowledge of 

how to manage cyclical businesses efficiently, enable us 

to integrate smaller businesses with complementary pro- 

duct portfolios rapidly into the group and realize their 

added value at once. 

With its deeply rooted Total Solution capability, Saurer is de- 

veloping more and more from a textile machine manufac- 

turer to become a provider of total solutions to our customers 

worldwide, able to offer turnkey solutions for all yarn pro- 

duction requirements. This capability has been further refined, 

and five new total solution concepts have been developed 

for natural and synthetic yarns. 

Success of the Saurer network. Innovation will continue to 

be a driving force in Saurer’s market positioning. The TTM 

process (time to money) which the TEMPUS program intro- 

duced as a product generation process covers not only the 


product development phase but embraces the whole pro- 

cess from the original idea to solve a customer problem right 

through to market introduction including evaluation of suc- 

cess in terms of cash flow. Projects are developed on a multi- 

disciplinary basis in mixed teams made up from marketing, 

sales, development, production and service. In this way the 

use of scarce resources is measured against a shared target 

for planned cash inflows. New products with enhanced cus- 

tomer value, clearly differentiated from our competitors’ of- 

ferings, are an essential tactic in preserving Saurer from a 

single-dimensional price war. 

Textile Solutions’ worldwide sales and service network was 

further consolidated in 2005, and the common systems 

handling administration and logistics were unified further. 

This promotes sharing of market information and efficient 

exchange of production capacity. In cooperation with IMD 

in Lausanne, over 250 Saurer employees worldwide were 

trained in Saurer’s intensive approach to customer service. 

The central focus was on recognizing and categorizing cus- 

tomer needs, then converting these rapidly into products 

with a clear analysis of value to the customer. 

We must continue to watch carefully for opportunities to in- 

crease the flexibility of the organization. Following the initial 

component outsourcing effort which is now more or less 

complete, our focus is now on increasing the level of original 

manufacture and value added in Asia and in dollar-related 

areas. To this end, after completion of its planning phase the 

new Saurer logistics and production center in Suzhou (China) 

was built and occupied in 2005. All Saurer’s activities in the 

area are now grouped at this location, which will increase 

flexibility and reduce administration costs. The site was plan- 

ned to accommodate other Saurer activities if required, and 

the first to take advantage of this was Transmission Systems, 

who is just starting production of axles for fork-lift trucks. 

Our previous factory building in Suzhou, occupied for three 

years and now too small, was cleared and sold towards the 

end of 2005. Components and subassemblies are increas- 

ingly sourced locally, partly with the aim of reducing the 

currently dominant dependency on the euro. However, our 

worldwide supply network remains the basis for flexible and 

cost-efficient supply in all business areas. 


PAGE 8 



Our company culture is subject to daily scrutiny by our cus- 

tomers, and we are very conscious that there remains much 

to be done, despite the tangible changes of recent years. 

Our aim is for all employees to develop a sense of value to 

the customer, external or internal, in everything they do, and 

always to question the need and efficiency of what they are 

doing. This is a continuing management challenge at all 

levels. One very positive development is that efficient and 

unprejudiced cooperation between colleagues from diffe- 

rent regions has become the norm within Saurer. Our latest 

plans for referral of projects to Asia, joint development of 

new products for local markets, adaptation of marketing 

initiatives to other regions, all bear witness to this. Here we 

see how Saurer is moving in large steps from being a 

successful exporter of textile machines to becoming a global 

provider of total solutions for the textile industry. 

EBIT 

17% 

AMERICA 

2003 

16% 

EUROPE 

2004 

67% 

ASIA 

Worldwide sales distribution 2005 

Textile Solutions 

1275 

1209 

1173 

2005 

62.2 76.0 62.9 

MARGIN 4.9% 6.3% 5.4% 

Sales 2003–2005 

Textile Solutions in EUR m

Neumag – Total Solution for nonwovens. Neumag had 

another very good year. Efforts of recent years in develop- 

ment of new installations, machines and other equipment 

formed the basis for success in all markets, which led to a 

clear increase in sales and profits. The new staple fiber pro- 

duction installation was successfully installed in 2005 with a 

number of customers in China. This included the largest 

staple fiber installation ever, with 6 times 200 tons daily pro- 

duction capacity, which requires 100 large trucks daily to 

transport the product to the customer. Thanks to the new 

carpet yarn equipment S5 and S3, Neumag’s market positi- 

on in this segment was reinforced and substantial orders 

from U.S. and Turkey were won and delivered. Strenuous ef- 

Neumag nonwovens technology portfolio 

Preparation/ 

Spinning 

Formation 

Bonding 

Packaging/Winding 

Airlaid 

Short fibers 

Airlaid 

M&J 


forts were devoted to development of the new nonwovens 

business. Decisive steps were completion of the pilot line in 

Neumünster for process development and customer sampling, 

and also the acquisition of four technology companies (Au- 

tefa, Kortec, Fehrer and Fincarde) which will help to position 

Neumag as a provider of total solutions in the nonwoven 

market. Another important milestone was delivery, installa- 

tion and production go-ahead for the largest spunbond in- 

stallation in Italy, for Procter & Gamble. 

Carding 

Long fibers 

Spunlace Needle Punching 

Festooning 

Fehrer 

Kortec 

Carding 

F.O.R 

Crosslapping 

Autefa 

Thermal bonding 

Winding 

Spunbond 

Granulate, polymer 

Spinning 

Meltblown 

Neumag 

Neumag 

Chemical bonding 

In-house technology Technology provided by partners 


PAGE 10 



Barmag Spinning Systems – higher sales despite weak 

markets in China. Barmag Spinning Systems again exceeded 

their sales of the previous year, although order intake was 

considerably lower. Together with cost improvements from 

the TEMPUS program this led to a further improved result. In 

China particularly order levels dropped dramatically, and al- 

though some larger orders were received from India, these 

could not compensate. Increasing market pressure from Chi- 

na forces firms in the other textile-producing countries of 

Asia to invest in modern, high-quality equipment, which of 

course offers opportunities for Saurer. Among higher quality 

yarns such as supermicrofilaments, or extremely strong 

yarns as used in tyre manufacture, new applications and cus- 

tomer needs have recently surfaced and were successfully 

supplied using the Total Solution approach. Further business 

potential was won by presentation of new and innovative 

products such as the 20 times FDY installation and the 

supermicrotechnology with up to 400 filaments. With the 

acquisition of ERMAFA in Chemnitz a foundation stone was 

laid for a broader entry into the recycling of plastics. Rapidly 

rising prices for energy and raw materials are opening up a 

broad field of new applications for recycling. 

Barmag Texturing Systems – innovation in a downturn. 

The market for texturing systems weakened clearly in 2004, 

then it halved itself again in 2005 to reach a level around 

one-third of it was in 2003. Practically all regions were affected 

by this contraction of demand, particularly China. Although 

Barmag was able to build up its market share in this very dif- 

ficult market, thanks to the new MPS product range, and 

despite rigorous cost savings introduced in the previous year 

which gave higher contribution margins, the massive sales 

recession could not be compensated and the business unit 

closed with a loss. Construction of production facilities in 

Suzhou (China) continued apace, together with resizing of 

capacities in Europe. The new generation of automatic tex- 

turizing systems MPS was tested successfully by various 

customers in 2005, and the first large order, for 48 systems, 

was delivered and installed in the fourth quarter. Also, 30 of 

a new low-cost machine developed in China and based on 

the FK6-1000 were sold in the last quarter. 

Schlafhorst Rotor Spinning Systems – success with new 

Autocoro 360. The rotor spinning business stayed at the low 

level of the previous year; a slight improvement in sales was 

matched by a small reduction in orders. Business improved 

in China, U.S. und India but declined in other markets. In 

2005 the Autocoro 312 was replaced by the fully automated 

Autocoro 360. The new machine’s increased productivity, its 

high flexibility which also permits production of special ef- 

fect yarns, and also the further perfected magnetic bearings, 

qualify it as best of class by a clear margin. This included 

the market launch of a new yarn quality monitoring system 

Corolab XQ, developed by Schlafhorst. These digital sensors 

are fully integrated in the Autocoro and enable valuable new 

perspectives over the yarn quality and fault detection. The 

technological progress marked by the Autocoro, together 

with the weak market demand, forced our competitors to 

reduce their prices to preserve their market share. Satis- 

factory business was done also with the manual and semi- 

automatic rotor spinning machines made in China and the 

Czech Republic, mainly for projects in Asia. 

Zinser Ring Spinning Systems – accelerated engagement 

in Asia. Zinser was unable to maintain its momentum of re- 

cent years. Recessive demand in the traditional Zinser mar- 

kets of Europe, Near and Middle East and U.S. put a damper 

on sales which could not be compensated fully by better 

business in Asian markets. This shift in the market was ex- 

pected, but came with unexpected speed and led to a more 

radical rethink and rebuild of Zinser in the direction of India 

and China, which will bear fruit in 2006 with new products 

for these markets. Zinser’s product range will be radically re- 

thought for the Asian market, as production starts in the 

new plant in Suzhou and in cooperation with our new part- 

ner Jinsheng, in whose business Saurer acquired a majority 

shareholding at the end of 2005. Production of roving 

frames for the Indian market, which started last year, is 

going well and clearly exceeded its sales targets in 2005. 

Schlafhorst Winding Systems – strong demand for cot- 

ton spinning leads to another record year. Winding Sys- 

tems’ business enjoyed another record year in sales and prof- 

its. The robust, technically unchallenged Autoconer winding 

machine did well in almost all markets. Particularly in China 

and India, which are by far the largest markets, the steps we 

have taken in sales and service areas have led to better mar- 

ket penetration and a higher market share. By virtue of strict 

cost management, innovative new components and flexible 

process management directed toward the volatile markets,

margins were held despite intense price competition. The 

successful market launch of the Autoconer Gold Edition and 

our various equipment and accessory packages designed for 

different markets and customers further enhanced customer 

acceptance. The new Ecopack with its exact length measure- 

ment in thousandths reduces the loss of yarn by up to 80% 

in subsequent processing, which has great appeal for our 

cost-conscious and demanding clientele. 

Volkmann Twisting Systems – FOCUS well established in 

Asian market. After a poor year in 2004, the twisting 

business revived a little this year, but sales volumes were still 

unsatisfactory overall. The slight revival in sales together 

with further cost reductions from TEMPUS led to a clearly 

positive operating result. FOCUS, a new low-cost twisting 

machine for cotton yarn, developed and built in China, was 

very well received by our Asian customers especially in Chi- 

na, India and Pakistan, and over 200 were delivered in the 

first year alone. The CompactTwister, a twisting machine in 

the upper price/performance category, also profited from 

our increased market presence and achieved high sales. The 

cabling equipment business for carpet yarns also went well; 

particularly in America our Total Solution approach, together 

with Neumag’s spinning systems, found favor with cus- 

tomers. In 2005 the first of a new generation of glass-fiber 

twisting machines, developed with a Czech partner, was 

delivered to a customer in China. 

Saurer Embroidery Systems – profitable in a downturn. 

Over the past two years Saurer Embroidery Systems has been 

renewing its sales program and clearing out its product 

palette. This, together with rigorous fixed cost reductions 

from the TEMPUS program, enabled the business unit to 

achieve a clearly positive result despite drop in market 

demand by almost a half. This is the benchmark for flexibility 

in the Saurer group. After a strong prior year, demand for 

shuttle embroidery was enormously reduced in almost all 

markets. The single and multihead embroidery business – 

the new AMAYA machine from Melco – did not attain its 

high growth targets either. The slow, still unsatisfactory 

growth in Asia was almost completely set off by the low 

volumes in the traditional U.S. market. Despite improvements 

that have been made, the potential of this system is now- 

here near being exhausted. The first large-scale installation 

of WINPRO spinning/twisting machines, the new high 


performance technique for wool spinning, was delivered to 

an Italian customer. Preparing the system for a broader 

range of applications is proving to be more time-consuming 

than was originally expected, and the financial circumstances 

of many of our customers have delayed their decision 

process considerably. However, by the fourth quarter the 

system was undergoing evaluation by several important 

customers and opinion leaders in the market. 


PAGE 12 

OUTLOOK 



Saurer has successfully concluded a phase of consolidation 

with emphasis on improvement of business processes and 

cost structures, together with realignment of the company’s 

culture. After thus looking inward with the aim of reducing 

risk, our full concentration is now directed outward again, 

aiming to seize every business opportunity, but without ne- 

glecting the virtues we have learned from the TEMPUS pro- 

gram. This change of direction from optimizing existing pro- 

cesses to new growth was clearly evident in 2005, both in 

Textile Solutions and Transmission Systems. Growth plans 

with steps clearly defined, time and cost budgets for new 

products, areas of application and markets have been 

worked up in all business areas and approved by Board of 

Directors. Our recent investments in technology companies, 

acquisition of know-how to form the basis for new products 

and the construction of our new facilities in Asia, are all part 

of this program. 

THANK-YOU 

The Board of Directors and the Management would like to 

thank all employees for their effort and commitment to 

Saurer. The will to change, and the active pursuit of change, 

Prof. Dr. Giorgio Behr 

Chairman of the Board 

The strong cash flow of recent years and our balance sheet, 

still in robust good health after several acquisitions, form the 

basis for a return to profitable growth. The expansion of our 

production capacity in Asia and resizing of our real estate in 

Europe are making good progress. 

In accordance with Saurer’s dividend policy, the Board of 

Directors proposes a capital repayment of CHF 1.80 per 

registered share. This gives Saurer scope for further attrac- 

tive acquisitions to expand its operations. 

For 2006, Saurer does not expect to see organic growth. Our 

acquisitions of 2005 will however contribute to increased 

sales in the textile sector (approx. EUR +80m) and to a much 

larger sales volume in Transmission Systems (approx. +EUR 

175m / consolidation of Fairfield from February 2006). Devel- 

opments in the volatile textile business are hard to predict, 

so the forecast of sales of Saurer Textile Solutions contains a 

degree of uncertainty. 

have strengthened Saurer and given us all a healthy base for 

a new phase of growth. 

Heinrich Fischer 

CEO and Board Delegate

MUSANGALA 

Growth starts with needs, ideas and energy. 

A company is more than its balance sheet and income statement, its products and markets, 

its machines and factories. A company’s success stems largely from the spirit which drives it, 

from the shared values and the goals which guide its people in their daily work. 

In the long term the worth of a company depends on the value it creates for its customers, 

its employees and its shareholders. A company wishing to grow must create new value and 

only through growth can it break out of the endless spiral of competition, improvements in 

efficiency and value lost in costs or in lost people. “We must seek success (value) in the 

heads of our customers” 1 – that is, the success of products or services depends largely 

on making customer attitudes and values the basis of business decisions. Growth will 

be achieved only by those who understand their customers’ view of the world better and 

can quickly provide solutions for their needs. The difficulty is that customer needs are as 

individual and varied as the customers themselves. Nowadays we have to adapt to each 

individual customer. The hard factors such as value for money, technology and product 

quality must all be in order; this is basic and the market demands it. Increasingly, it is the soft 

factors which are decisive, such as mutual trust, working well together, customer relations 

in general. Whether hard factors or soft: “The soul of our firm must be obsessed with our 

customers.” 

1 Peter Kruse (expert in human cognition) 


To grow, the company must be in good health. Our good health comes from the TEMPUS 

program. To this underlying rhythm of efficient business processes and a customer and team 

oriented company culture has been added a second beat, since mid-2004, which will give us 

a new overall rhythm. MUSANGALA should give Saurer profitable growth of EUR 600m, 

without neglecting the virtues of TEMPUS. However, that tangible sense of relief from 

our colleagues over this change of direction is premature. It is a lot harder to generate prof- 

itable growth than it is to optimize business processes and reduce costs. New ideas cannot 

simply be ordered up. They need a background of creativity and openness, a readiness to 

take risks, and the courage to turn back when we go wrong. 

Recognizing the need and having the right idea is hard enough. To succeed, we need energy 

to achieve results quickly and to overcome setbacks; we must persevere and always keep 

our eye on the ultimate goal. Does Saurer have the right people in all the right places, 

people whose energy and competence will assure us of success? To have better people than 

the competition will be a vital success factor in MUSANGALA and an important challenge 

for our leaders. 

However, not all forms of growth are healthy and wanted, not every idea is a good idea and 

worthy of realization. But without ideas, many ideas, to choose from, nothing new can be 

created. Just as in our garden we distinguish between flowers and weeds, we must often 

cut back to give promising young branches the light and space they need for growth. 

I think that TEMPUS has prepared and qualified us for this new challenge. If we can attack 

the next phase with humility and respect for the scale of the task, mixed with unquestioning 

faith in our own ability and strength, then I see no reason why our MUSANGALA program 

should not be crowned with success. 


Heinrich Fischer CEO

034 / MANAGEMENT’S DISCUSSION OF RESULTS 

CONSOLIDATED FINANCIAL STATEMENTS 

045 / CONSOLIDATED INCOME STATEMENT 

046 / CONSOLIDATED BALANCE SHEET 

047 / CONSOLIDATED CASH FLOW STATEMENT 

048 / CONSOLIDATED STATEMENT OF 

SHAREHOLDERS’ EQUITY 

049 / ACCOUNTING POLICIES 

054 / NOTES TO THE CONSOLIDATED FINANCIAL 

STATEMENTS 

071 / PRINCIPAL COMPANIES AND INVESTMENTS 

072 / REPORT OF THE GROUP AUDITORS 

MULTIPLE YEAR COMPARISON 

074 / MULTIPLE YEAR COMPARISON 

FINANCIAL REPORT OF SAURER LTD. 

080 / INCOME STATEMENT 

081 / BALANCE SHEET 

082 / NOTES TO THE FINANCIAL STATEMENTS 

084 / PROPOSAL TO THE GENERAL MEETING 

085 / REPORT OF THE STATUTORY AUDITORS

PAGE 34 

The Business Year 

MANAGEMENT’S DISCUSSION OF RESULTS 

In 2005 Saurer generated lower order intake and slightly lower sales than in 2004. Although Transmission Systems showed moderate growth it was 

not sufficient to compensate for Saurer Textile Solutions‘ lower sales volume and declining margins. Consequently, operating results were down, 

despite further cost savings and efficiency improvements made in the year. The net income from continuing operations however has improved by 

EUR 6m thanks to lower financial and tax expense. 

In the textile division both sales and orders were down on the previous year. After the high investment levels of last year, trade disputes and the result- 

ing uncertainty affecting the textile industry held back demand from China, and put constant pressure on margins in the textile machine business. 

However, thanks to strict cost management, Saurer Textile Solutions managed to achieve a satisfactory result for the year, with still high return on 

capital employed. 

Transmission Systems‘ business continued to improve. A strong first half-year, stable market conditions with good margins and significantly lower 

restructuring costs than the previous year, all contributed to a significant increase in the operating result. 

Following the divestment of the Surface Technology division, completed last year, and the successful implementation of Saurer‘s TEMPUS program 

promoting business efficiency, 2005 was a year marked by a number of new investments in the textile division. These were mainly in the areas of 

nonwovens and textile components and in the reporting year increased the group‘s net assets while reducing its net cash. However, there was only a 

minor impact from the new acquisitions on the operating result in 2005. 

Employee numbers increased with the acquisitions by 1 369 but were reduced by 200 as a result of restructuring measures. The year closed with total 

employees of 10 021. 

The Surface Technology division was fully discontinued in 2004 and made no contribution to 2005 results. The 2004 figures were restated accord- 

ingly. A further restatement of 2004 results was made due to changes in the IFRS standards regarding accounting for stock option plans, resulting in 

EUR 2.3m higher operating expense in both years. 

In the following tables all currency amounts are stated in EUR 000. 

Management’s discussion of results Saurer 2005

Order Intake 

MANAGEMENT’S DISCUSSION OF RESULTS PAGE 35 

Change Adjusted change 

2005 2004 1) in % in % 2) 

Saurer Textile Solutions 1 066 663 1 306 144 –18.3 –21.1 

Europe 188 390 180 074 4.6 

North and South America 217 908 188 326 15.7 

Middle/Far East, Rest of World 660 365 937 744 –29.6 

Transmission Systems 397 130 383 690 3.5 3.5 

Europe 311 996 298 700 4.5 

North and South America 63 657 68 439 –7.0 

Middle/Far East, Rest of World 21 477 16 551 29.8 

Total Saurer 1 463 793 1 689 834 –13.4 –15.6 

Europe 500 386 478 774 4.5 



1) Restated. 

2) Adjusted for currency effects and acquisitions. 

Order intake for 2005 was well below the previous year. This was mainly influenced by the market development in China and Turkey. In India, how- 

ever, both Saurer Textile Solutions and Transmission Systems reported increased order volumes. 

In China, a number of large-scale investment projects were completed in recent years and the downturn in the market was to be expected. Despite 

this, Asia was still by far the most important market in the textile machine business also in 2005. 

Transmission Systems enjoyed positive business development leading to increased demand, mainly in Europe and India. Whereas orders increased also 

in North America, in South America market demand was clearly reduced. 


PAGE 36 

Sales 


Change Adjusted change 

2005 2004 1) in % in % 2) 

Saurer Textile Solutions 1 172 656 1 209 410 –3.0 –6.3 

Europe 192 455 172 092 11.8 



Transmission Systems 397 130 383 690 3.5 3.5 

Europe 311 996 298 700 4.5 

North and South America 63 657 68 439 –7.0 

Middle/Far East, Rest of World 21 477 16 551 29.8 

Total Saurer 1 569 786 1 593 100 –1.5 –3.9 

Europe 504 451 470 792 7.1 



1) Restated. 

2) Adjusted for currency effects and acquisitions. 

Saurer‘s consolidated sales for 2005 were down EUR 23m compared with 2004. The high order book at the start of the year helped Saurer Textile 

Solutions to contain an otherwise greater sales reduction in difficult market conditions. The new acquisitions account for EUR 42m of sales in 2005. 

A slight revival of business for Transmission Systems compensated only partially for the declining sales of Textile Solutions. In Transmission Systems 

order lead times are short, so the same market conditions as described above for order income apply to sales. 

Orders on Hand 

2005 2004 

Saurer Textile Solutions 392 008 459 613 

Transmission Systems – – 

Total Saurer 392 008 459 613 

As a result of the currently hesitant market demand in the highly cyclical textile machine business, orders on hand are down by EUR 68m compared 

to the previous year. However, a comparison over several years shows that this level of orders lies within the typical range of demand fluctuation for 

the textile machine business. 


Saurer Textile Solutions 


(EUR 000) 2005 % 2004 1) % 

Sales 1 172 656 100.0 1 209 410 100.0 

Operating profit 62 850 5.4 76 027 6.3 

Depreciation and amortization 34 227 39 115 

EBITDA 97 077 8.3 115 142 9.5 

Capital expenditure 50 411 33 449 

Net Operating Assets (including goodwill) 399 262 298 951 

Employees (full-time equivalents at year-end) 7 099 5 861 

of which from acquisitions made in 2005 1 369 – 

1) Restated. 

The textile sector suffered from reduced sales and constant pressure on margins, and despite rigorous cost management and high operating flexibility 

the operating result of the previous year was not attained. However, achievements in cost reduction can be seen clearly over the years: Saurer Textile 

Solutions‘ operating profit of 2005 is close to double the operating profit of 2002, a business year with comparable sales volume. 

The various business areas underwent different cycles and this supported a more or less constant business performance for textile machines overall: 

low sales in texturing, ring spinning and embroidery machines were compensated by volume increases in the other business areas, with a record year 

for winding. The high level of capital expenditure in 2005 compared with 2004 was directed mainly to completion of the new plant in Suzhou, China, 

and includes EUR 18m for this purpose. 

In the important markets for components, Saurer‘s market presence and product portfolio were enhanced by the acquisition of Heberlein (Switzerland 

and Germany) at the end of the year. The staple fiber portfolio of Saurer in future will be expanded by the new 70% joint venture with Jinsheng in 

China. 

Due to the acquisitions at year-end net operating assets were increased, but as the acquired companies were not consolidated for the whole year there 

was only a minor impact on the operating result. 

Outlook 

Saurer has made a number of strategic acquisitions with a view to building up its market leadership as provider of total solutions in the textile machine 

business, thereby enhancing its process and technology competence as well as securing its market position and the stability of its margins for the 

future. The completion of the plant in Suzhou (China) and the joint venture with Jinsheng (China) strengthen the local presence in the important Asian 

markets. This will enable Saurer to benefit from the next cyclical recovery in the textile machine business. Alongside further process improvements and 

cost reduction targets the focus is on building up total solution capability both internally and externally, and on integration and further development 

of new acquisitions. With a growing level of value added sourced from Asia and other low-cost as well as Euro-independent countries the market-led 

moves on the demand side of our business will be further matched on the purchasing side. 

For the year 2006 we have a rather cautious outlook. Saurer is starting with a reduced backlog of orders, markets in many segments are at the lower 

end of the industry cycle. The integration of the acquisitions, while holding a lot of potential for the future, will in the short-term deliver an operating 

performance below the normal level. 


PAGE 38 



2005 % 2004 1) % 

Sales 397 130 100.0 383 690 100.0 



EBITDA 61 059 15.4 55 978 14.6 


Net Operating Assets (including goodwill) 221 361 216 987 

Employees (full-time equivalents at year-end) 2 905 2 970 

of which from acquisitions made in 2005 – – 

1) Restated. 

In Transmission Systems the improved demand which had been noted in 2004 continued into 2005, with higher orders for components for agricul- 

tural and construction vehicles, Graziano Trasmissioni‘s core business, and stable sales volumes in the automotive market. In particular Graziano‘s 

home market of Europe developed very well, but business was also good in India. 

With the transfer of business activity from the Carr Hill plant (Great Britain) to India and Italy the consolidation phase of Graziano‘s operations was 

successfully completed. In planning its new operations in China and the Czech Republic, Graziano is able to draw support and benefit from Saurer 

Textile Solutions‘ country-specific experience and existing resources. 

During 2005 a number of prestigious customers selected Graziano Trasmissioni as supplier for a series of new multiple-year projects, some of which 

will explore new uses of technology, such as the stepless CVT (Continuous Variable Transmission). Thanks to higher sales volumes with good margins 

and a significant reduction of restructuring costs the start-up costs of these new customer projects were well covered and the operating profit 

improved in comparison with 2004. However, considering the capital-intensive nature of the Transmission Systems business the results achieved and 

the improved returns do not yet meet Saurer‘s targets. 

Outlook 

Before new customer projects will make the Graziano business grow again in 2007, 2006 will be a rather flat year. However, early in 2006 Transmission 

Systems acquired Fairfield Manufacturing Company Inc. (USA), which will strengthen its presence on the American continent and open the way to 

new transmission applications in niche markets. Besides Graziano‘s existing customer applications, transmissions can now be offered for mobile man 

lifts, cranes, drilling platforms, railways, mining and material transport systems and other applications. 

Realizing the synergies of their union from improved market access as well as the market potential of a broader product spectrum will be key to 

opening and exploiting new growth opportunities for Graziano Trasmissioni and Fairfield. Continued development of production facilities in India, 

China and the Czech Republic will lead to further cost reductions and will help to stay ahead not just with superior customer value, but also with 

attractive prices. 

Discontinuing Operations (Surface Technology) 

The divestment of the Surface Technology division was completed in 2004. No operational activities were left in 2005. For the prior year numbers 

please refer to the notes to the financial statements on page 58. 

Outlook 

Guarantees granted and all possible future obligations arising from the sale of Surface Technology have been evaluated at the balance sheet date and 

appropriately provided for in the accounts. 


Financial and Group Results 


2005 2004 1) 

Operating profit before amortization of goodwill and other intangible assets (EBITA) 91 692 102 827 

Amortization of goodwill and other intangible assets –3 403 –10 579 

Operating profit 88 289 92 248 

Financial expense (net) –9 762 –16 601 

Income taxes –23 367 – 26 490 

Result from discontinued operations (Surface Technology) – 18 211 

Profit for the period 55 160 67 368 

1) Restated. 

Financial expense was EUR 7m less than the previous year. Higher average net cash during 2005 and repayment of the 2 1 /4% convertible bond in June 

2005 led to higher interest income and lower interest expense. Also, income from marketable securities was increased, adverse currency effects were 

lower and the interest cost relating to pensions was reduced. In accordance with IAS 32, interest expense amounting to EUR 1.8m was charged to 

the income statement for the 2 1 /4% convertible bond although only an amount of EUR 0.9m was actually paid. The effective tax rate for the group 

was reduced slightly despite lower income before taxes and the fixed character of deferred tax asset write-offs and the Italian tax on personnel 

expense (IRAP). 

Cash Flow 

2005 2004 1) 

Cash flow from operating activities 71 464 163 174 

Capital expenditure (net of capital grants) –78 301 –60 604 

Proceeds from sale of fixed assets 23 704 10 786 

Free cash flow 16 867 113 356 

Divestment (acquisition) of investments –12 886 82 392 

Assumption of debt (acquisitions), release of debt (divestments) –35 225 – 

Repayment of capital, purchase and sale of treasury shares / options –6 012 –17 610 

Other net cash movements 7 533 –4 276 

Increase (Decrease) Net Cash –29 723 173 862 

1) Restated. 

In 2005 a substantial cash flow was again generated from operating activity, although EUR 92m less than the high level of 2004. This was partly 

caused by the extended utilization of provisions mainly related to restructuring activities. Also, as already shown, the excess liquidity of EUR 35m 

deriving from receivables and payables which enhanced the cash flow in 2004 had the opposite effect in 2005. The increase in capital expenditure 

related to the expansion in Asia is partially offset by the proceeds from sale of fixed assets, mainly cash from the sale of real estate in Great Britain, 

Germany, and Switzerland. The relatively small cash flow in 2005 was mainly used for acquisitions amounting to a total of EUR 48m in cash payments 

and assumed debt. In January 2006 net cash was reduced by more than EUR 200m due to the acquisitions of Fairfield and Temco. For the acquisitions 

of Fairfield and Jinsheng Saurer used USD 280m of bridge financing from four Banks. This bridge financing will be replaced by mid 2006. 


PAGE 40 

Net Cash and Equity 


2005 2004 1) 

Net Cash 111 762 141 485 

Liquid assets 165 888 265 679 

Short-term debt –29 066 –9 935 

Convertible bond (repayment in June 2005) – –82 703 

Long-term debt –25 060 –31 556 

Net Tangible Worth (Equity minus Goodwill) 459 097 420 668 

Shareholders‘ equity 574 976 516 725 

Goodwill –115 879 –96 057 

Ratios 

Equity in % of Total Assets 45.5% 39.7% 

Net Tangible Worth in % of Total Assets 36.3% 32.3% 

1) Restated. 

The repayment of the 2 1 /4% convertible bond in June 2005 was made from available liquid funds. The comfortable net cash position secures the 

financing for the Fairfield acquisition announced shortly after the year-end. Further, the increased equity ratio emphasises Saurer‘s strong financial 

position and potential for future growth and debt capacity. 


Business Risks 


Shortening market cycles 


Market cycles are getting shorter. In 2003 the business unit Texturing saw its order volume reduced by 65% within three months. In 2004, Embroidery 

has experienced a reduction in orders of 50% over twelve months. In the past years, Saurer Textile Solutions has taken many measures to encounter 

the shortening market cycles: The TEMPUS program has resulted in a hefty reduction of the fixed costs. Significant transfers of production and 

sourcing have taken place from high costs regions (Western Europe) to low cost regions (China, India), further will follow. As a consequence, Saurer 

Textile Solutions has been able to maintain a relative constant profitability over the last years, while the volatility of some markets has been dramatic. 

Risk mitigation is also supported by the number of business units with partially very different market cycles, strongly reducing the volatility of Saurer 

Textile Solutions as a whole. 

Pressure on service and spare parts business 

Due to the shift in markets in the last years, the installed machine basis has grown significantly in Asia. The world-wide installed machine basis has 

always helped a constant revenue stream for service and spare parts. As customers in Asia traditionally have a different view on service, preventative 

maintenance and the value of quality spare parts than customers in the traditional markets, the business from spare parts and after market services 

has been under constant pressure. Such pressures are being encountered by systematic marketing activities, segmented sales channels, focused 

acquisitions, and customer value offerings for high end as well as low end segments. 

Growing importance of low-end and mid-range markets 

In the past Saurer Textile Solutions was active mainly in the premium market segments, based on its technological leadership. We are however witness- 

ing a growing importance of the lower-end segments. This has motivated Saurer Textile Solutions to play in all fields of the markets. With the recent 

acquisition of the majority shareholding in Jinsheng (China), with successful development and market introduction of our own low end machines, 

with the opening of our new 70 000 m 2 plant in Suzhou, Saurer Textile Solutions is preparing itself to play not just successfully in the high end, but 

also in the low end of the market. 


Pricing pressure and Far East competition 

While exposure to steel and energy costs is a known risk in the industry, it is also expected that competition from the Far East will increase in future. 

In order to prepare for these pressures, Graziano Trasmissioni has product cost reduction programs in tight coordination with customers and is 

continuously optimizing its manufacturing processes. Additionally, Graziano Trasmissioni is lowering its cost basis by transferring activities to our India 

facility and to the Saurer location in Suzhou, China. 

Dependence on construction and agricultural markets 

Graziano Trasmissioni has a relatively high dependence on the construction equipment and agricultural machinery markets. In order to decrease their 

dependence, Graziano Trasmissioni has been looking for a diversification of its existing business. Subsequent to year-end, such diversification was 

completed by the acquisition of Fairfield Manufacturing Company. 


CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED INCOME STATEMENT for the years ended December 31, PAGE 45 

(EUR 000) Note* 2005 % 2004** % 

Sales 1 1 569 786 100.0 1 593 100 100.0 

Cost of goods sold –1 254 557 –79.9 –1 252 070 –78.6 

Gross profit 315 229 20.1 341 030 21.4 

Selling and distribution –80 134 –5.1 –79 156 –5.0 

Research and development –71 545 –4.6 –74 069 –4.6 

Administration and other 2 –75 261 –4.8 –95 557 –6.0 

Operating expenses –226 940 –14.5 –248 782 –15.6 

Operating profit 3 88 289 5.6 92 248 5.8 

Financial expense (net) 4 –9 762 –0.6 –16 601 –1.1 

Profit before income taxes 78 527 5.0 75 647 4.7 

Income taxes 5 –23 367 –1.5 –26 490 –1.6 

Profit from continuing operations 55 160 3.5 49 157 3.1 

Result from discontinued operations 6 – – 18 211 1.1 

Profit for the period 55 160 3.5 67 368 4.2 

Attributable to 

Shareholders of Saurer Ltd. 53 392 66 774 

Minority interests 1 768 594 

55 160 67 368 

* For details see the notes to the consolidated financial statements, pages 54–70. These are an integral part of the consolidated financial statements. 

** Restated. For details see page 50. 

Earnings per share (EUR) 2005 2004 

Continuing operations 

Basic earnings per share 3.72 3.43 

Diluted earnings per share 3.70 3.41 

Discontinued operations 

Basic earnings per share – 1.28 

Diluted earnings per share – 1.27 

Total 

Basic earnings per share 3.72 4.71 

Diluted earnings per share 3.70 4.68 

See note 7, page 58. 

Consolidated financial statements Saurer 2005

PAGE 46 

CONSOLIDATED BALANCE SHEET as at December 31, 

(EUR 000) Note* 2005 % 2004** % 

Assets 

Cash and cash equivalents 120 950 216 196 

Marketable securities and time deposits (due after 90 days) 44 938 49 483 

Liquid assets 165 888 13.1 265 679 20.4 

Accounts receivable, trade 8 251 345 226 685 

Inventories 9 231 920 233 436 

Current income taxes 8 576 6 852 

Prepayments and accrued income 2 014 3 356 

Other receivables 51 431 83 724 

Current assets 711 174 56.2 819 732 63.0 

Non-current financial assets 10 17 770 18 921 

Deferred income taxes 5 31 077 34 841 

Property, plant and equipment 11 375 874 325 211 

Intangible assets 12 129 184 102 196 

Non-current assets 553 905 43.8 481 169 37.0 

Total assets 1 265 079 100.0 1 300 901 100.0 

Liabilities and shareholders‘ equity 

Short-term debt 13 18 735 3 

Short-term portion of long-term debt 13 10 331 92 635 

Accounts payable, trade 167 387 196 003 

Accruals and deferred income 85 686 83 221 

Current income taxes due within 1 year 11 946 4 622 

Short-term provisions 14 55 947 77 447 

Other current liabilities 106 915 88 250 

Current liabilities 456 947 36.1 542 181 41.7 

Long-term debt 13 25 060 31 556 

Long-term provisions 14 9 987 9 235 

Current income taxes due after 1 year 624 526 

Deferred income taxes 5 18 358 25 738 

Long-term employee benefits 15 178 923 174 829 

Other non-current liabilities 204 111 

Non-current liabilities 233 156 18.4 241 995 18.6 

Total liabilities 690 103 54.5 784 176 60.3 

Minority interests 11 494 0.9 2 938 0.2 

Share capital 16 85 853 110 228 

Group reserves 429 828 398 302 

Treasury shares and options –5 591 –61 517 

Profit for the period attributable to shareholders of Saurer Ltd. 53 392 66 774 

Equity attributable to shareholders of Saurer Ltd. 563 482 44.6 513 787 39.5 

Shareholders‘ equity 574 976 45.5 516 725 39.7 

Total liabilities and shareholders‘ equity 1 265 079 100.0 1 300 901 100.0 




CONSOLIDATED CASH FLOW STATEMENT for the years ended December 31, PAGE 47 

(EUR 000) Note* 2005 2004** 

Cash flow from operating activities 

Profit for the period 55 160 67 368 

Income tax expense, including discontinued operations 23 367 27 164 

Depreciation and amortization, including discontinued operations 63 918 75 526 

Changes in net working capital 17 –39 712 38 023 

Gain on sale of fixed assets (net) –290 –12 472 

Profit on sale of discontinuing operations – –16 202 

Movements in provisions –27 757 –10 573 

Other non-cash items 4 708 11 599 

Interest expense (net) 9 322 12 889 

Interest received 3 760 3 249 

Interest paid –4 962 –7 317 

Income taxes paid –16 050 –26 080 

Cash flow from operating activities 71 464 163 174 

Cash flow from investing activities 

(Acquisition) divestment of subsidiaries and other equity investments (net) 18 –12 886 82 392 

Repayment of loans and other financial assets 3 448 523 

Capital expenditure –78 301 – 60 834 

Government grants received – 230 

Sale (purchase) of marketable securities 8 918 – 45 153 

Proceeds from sale of fixed assets 23 704 10 786 

Cash flow from investing activities –55 117 –12 056 

Cash flow from financing activities 

Increase of debt financing 2 751 161 

Repayment of debt financing – 26 404 – 16 109 

Repayment/repurchase of 2 1 /4% convertible bond 2000–2005 –83 726 –5 499 

Dividends to minority shareholders –1 373 –245 

Sale (purchase) of treasury shares and options (net) 12 568 –17 610 

Capital repayment to the shareholders of Saurer Ltd. – 18 580 – 

Cash flow from financing activities –114 764 –39 302 

Foreign exchange differences on cash and cash equivalents 3 171 –1 073 

Net (decrease) increase in cash and cash equivalents – 95 246 110 743 

Cash and cash equivalents as at 01.01. 216 196 105 453 

Cash and cash equivalents as at 31.12. 120 950 216 196 

Included in the cash flows reported above are the following cash flows from discontinued operations (see Note 6): 

Cash flow from operating activities – 8 851 

Cash flow from investing activities (including proceeds from divestment) 1 122 87 334 

Cash flow from financing activities – –265 




PAGE 48 

CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY 

Capital Foreign currency 

Share and legal translation Hedging Treasury shares Retained Minority Total 

(EUR 000) capital reserves reserve reserve and options earnings interests equity 

Balance as at 01.01.2004 as reported 110 228 110 555 –10 603 6 524 –63 598 314 765 2 720 470 591 

Effect of IFRS 2 (Share-based Payment) – – – – – –1 995 – –1 995 

Balance as at 01.01.2004 restated 110 228 110 555 –10 603 6 524 –63 598 312 770 2 720 468 596 

Movements in cash flow hedges – – – 978 – – – 978 

Foreign currency translation – – –4 750 18 – – –104 –4 836 

Net income recognized directly in equity – – –4 750 996 – – –104 –3 858 

Profit for the period – – – – – 66 774 594 67 368 

Total recognized income for 2004 – – –4 750 996 – 66 774 490 63 510 

Dividends to minority shareholders – – – – – – –245 –245 

2 1 /4% convertible bond 2000–2005 – –521 – – – 521 – – 

Changes in structure (minority shareholders) – – – – – – –27 –27 

Change in treasury shares and options – –5 417 1 572 – 2 081 –13 345 – –15 109 

Balance as at 31.12.2004 110 228 104 617 –13 781 7 520 –61 517 366 720 2 938 516 725 

Movements in cash flow hedges – – – –8 523 – – – –8 523 

Foreign currency translation – – 11 192 –354 – – 195 11 033 

Net income recognized directly in equity – – 11 192 –8 877 – – 195 2 510 

Profit for the period – – – – – 53 392 1 768 55 160 

Total recognized income for 2005 – – 11 192 –8 877 – 53 392 1 963 57 670 

Capital reduction –18 074 – –706 – 200 – – –18 580 

Cancelation of share capital –6 301 –36 432 –1 585 – 44 318 – – – 

Dividends to minority shareholders – – – – – – –1 373 –1 373 

2 1 /4% convertible bond 2000–2005 – –8 000 – – – 8 000 – – 

Changes in structure (minority shareholders) – – – – – – 7 966 7 966 

Change in treasury shares and options – –15 824 28 – 11 408 16 956 – 12 568 

Balance as at 31.12.2005 85 853 44 361 –4 852 –1 357 –5 591 445 068 11 494 574 976 

The consolidated statement of shareholders‘ equity for 2004 has been restated to take account of IFRS 2, Share-based Payment, and to include 

minority interests in accordance with IAS 1 (revised). 

The capital and legal reserves may not be freely distributed. Distribution of the retained earnings is subject to certain restrictions, since the retained 

earnings of the subsidiaries have first to be distributed to Saurer Ltd. in accordance with statutory and fiscal regulations, before they are at the dis- 

posal of the shareholders‘ meeting of Saurer Ltd. The value of conversion rights in connection with the issue of the 2 1 /4% convertible bond 2000–2005 

was included in capital and legal reserves until the bond was repurchased or repaid, at which time the relevant portion was transferred to retained 

earnings. The convertible bond was repaid on June 26, 2005 and the remaining value of the conversion rights was transferred to retained earnings. 

(See also Note 13.) 

Foreign currency translation adjustments arise from changes in the exchange rates used to translate the opening equity and net result of group com- 

panies that report in currencies other than the Euro, as well as foreign exchange differences on long-term intercompany loans of an investment nature. 

Share capital and treasury shares are denominated in Swiss Francs and translated to Euros at historical exchange rates. 

The proposal of the Board of Directors for the appropriation of the retained earnings of Saurer Ltd. is presented on page 84. 

Details of the movements in the hedging reserve are shown in Note 22. 

For details of share capital, as well as treasury share and option transactions see Note 16. In accordance with Swiss law, the company is required to 

maintain a non-distributable reserve equivalent to the original costs of treasury shares. This reserve is shown under “Capital and legal reserves“ and 

is increased or decreased by transfers to or from retained earnings in line with movements in the corresponding treasury shares. 


Accounting policies 

(Except where otherwise noted, currency amounts are stated in EUR 000) 

Organization and business activity 

ACCOUNTING POLICIES PAGE 49 

Saurer Ltd. is a corporation organized under the laws of Switzerland with legal domicile in Arbon. The main activities of Saurer Textile Solutions are 

the development, manufacture and sale of textile systems and those of Transmission Systems are the development, manufacture and sale of trans- 

mission systems. Surface Technology was divested in 2003 and 2004 and for that reason is shown as Discontinued Operations. Saurer operates 

worldwide. 

Organizational changes within the scope of consolidation 

In January 2005 Saurer acquired 51% of Autefa automation GmbH, Germany, and a further 9% in October 2005. 100% of the following companies 

was also acquired in 2005: Kortec GmbH, Germany (April, subsequently merged into Saurer GmbH & Co. KG), ERMAFA Kunststofftechnik Chemnitz 

GmbH, Germany (July), Fehrer GmbH, Austria (September), Heberlein Fasertechnologie AG, Switzerland (December), Electrotex AG, Switzerland 

(December), Enka tecnica GmbH, Germany (December) and Fincarde S.p.A., Italy (December). In December 2005 Saurer founded jointly with Jinsheng 

the companies Saurer Jintan Textile Machinery Company Ltd., China, and Jintan Texparts Component Company Ltd., China, in both of which Saurer 

holds 70%. 

Principles for the consolidated financial statements 

General principles and accounting standards The consolidated financial statements are based on financial data of the individual group com- 

panies which has been drawn up in accordance with standardized accounting principles. The accounts are, in general, based on the historical cost 

convention, whilst certain items are reported at fair values, as noted below. The consolidated financial statements and the individual financial data of 

all companies are prepared in accordance with International Financial Reporting Standards (IFRS), including International Accounting Standards and 

Interpretations issued by the International Accounting Standards Board (IASB). 

Presentation The consolidated financial statements of Saurer are presented in Euros, although the parent company, Saurer Ltd., is domiciled in 

Switzerland. This reflects the fact that the Euro is the functional currency of the major part of Saurer‘s business. 

Changes in accounting policies IFRS 3, Business Combinations, which came into force for business combinations after March 31, 2004, was 

applicable for Saurer for the first time in 2005. A significant effect of this standard is that goodwill resulting from business combinations is no 

longer amortized in the income statement, but is subject to annual impairment testing, as noted below. In 2004 Saurer had goodwill amortization of 

EUR 7 347 for continuing operations and EUR 470 for discontinued operations, based on useful lives of a maximum of 20 years. The application of 

this standard will generally result in more intangible assets. 

The following major new or revised standards were implemented with effect from January 1, 2005 (with restatement of the prior year figures, where 

required): 

– IFRS 2, Share-based Payment 

– IFRS 5, Non-current Assets Held for Sale and Discontinued Operations 

– IAS 1, Presentation of Financial Statements 

– IAS 8, Accounting Policies, Changes in Accounting Estimates and 

– Errors 

– IAS 16, Property, Plant and Equipment 

– IAS 17, Leases 

– IAS 21, The Effects of Changes in Foreign Exchange Rates 

– (including early adoption of the amendment to “Net Investment in a 

– Foreign Operation“) 

– IAS 24, Related Party Disclosures 

– IAS 27, Consolidated Financial Statements and Accounting for 

– Investments in Subsidiaries 

– IAS 28, Investments in Associates 

– IAS 32, Financial Instruments: Disclosure and Presentation 

– IAS 33, Earnings per Share 

– IAS 36, Impairment of Assets 

– IAS 38, Intangible Assets 

– IAS 39, Financial Instruments: Recognition and Measurement 

– (including early adoption of “Cash Flow Hedge Accounting of 

– Forecast Intragroup Transactions” and the “Fair Value Option“) 

– IAS 40, Investment Property 

In accordance with IFRS 2, the fair value of stock options is taken to the income statement over the vesting period. Thereafter any changes in the fair 

value of cash-settled options are also taken to the income statement. Previously the effect of exercising stock options was netted with the correspond- 

ing gain on the sale of reserved treasury shares at the date of exercise. The result from the sale of the reserved treasury shares continues to be shown 

in equity. The corresponding figures for 2004 have been restated accordingly, as retrospective application is required for all cash-settled option 

plans. 

The income statement for 2004 has been restated in accordance with IFRS 5 to show the result from Discontinued Operations separately in one 

line. 

IAS 1 (revised) requires the shareholders’ equity to include minority interests. The consolidated balance sheet and consolidated statement of share- 

holders’ equity for 2004 have been restated accordingly. 

The effects of IFRS 2 and IFRS 5 for 2004 are shown below. The implementation of the other standards had no significant effect on the consolidated 

financial statements, apart from additional disclosures. 


PAGE 50 

ACCOUNTING POLICIES 

Effects of restatement 2004 IFRS 2 IFRS 5 

Income statement 

As originally Share-based Discontinued 2004 

published payment operations Restated 

Sales 1 614 364 – –21 264 1 593 100 

Cost of goods sold –1 264 867 – 12 797 –1 252 070 

Gross profit 349 497 – –8 467 341 030 

Selling and distribution –81 904 – 2 748 –79 156 

Research and development –75 244 – 1 175 –74 069 

Administration and other –94 916 –2 294 1 653 –95 557 

Operating expenses –252 064 – 2 294 5 576 –248 782 

Operating profit before sale of discontinued operations 97 433 –2 294 – 2 891 92 248 

Profit on sale of discontinued operations 16 202 – –16 202 – 

Operating profit 113 635 –2 294 –19 093 92 248 

Financial expense (net) –16 809 – 208 –16 601 

Profit before income taxes 96 826 –2 294 –18 885 75 647 

Income taxes –27 279 115 674 –26 490 

Profit from continuing operations 69 547 –2 179 –18 211 49 157 

Result from discontinued operations – – 18 211 18 211 

Profit for the period 69 547 –2 179 – 67 368 

Earnings per share (EUR) 

Basic earnings per share 4.87 –0.16 – 4.71 

Diluted earnings per share 4.84 –0.16 – 4.68 

Balance sheet 

Current assets 819 732 – – 819 732 

Non-current assets 480 617 552 – 481 169 

Total assets 1 300 349 552 – 1 300 901 

Current liabilities 539 258 2 923 – 542 181 

Non-current liabilities 241 995 – – 241 995 

Shareholders‘ equity 519 096 – 2 371 – 516 725 

Total liabilities and shareholders‘ equity 1 300 349 552 – 1 300 901 

Cash flow statement 

Cash flow from operating activities 164 977 –1 803 – 163 174 

Cash flow from investing activities –12 056 – – –12 056 

Cash flow from financing activities – 41 105 1 803 – –39 302 

Foreign exchange differences on cash and cash equivalents –1 073 – – –1 073 

Net increase in cash and cash equivalents 110 743 – – 110 743 

Several new or revised IFRS standards will become effective on January 1, 2006 or 2007. None of these is expected to have a significant effect on the 

consolidated financial statements of Saurer, except that additional information is required to be disclosed (e.g. IAS 19 (revised) for post-employment 

benefits, and IFRS 7 for capital disclosures). Saurer will implement these standards as of the required effective dates. 


Principles of consolidation 


Scope of consolidation The consolidated financial statements of Saurer Ltd. include all subsidiaries in which Saurer Ltd. directly or indirectly controls 

more than 50% of the votes and the share capital. Companies acquired during the year under review are included in the consolidation as from the 

date of acquisition. Companies which are divested are deconsolidated as of the date when control passes to the acquiror. 

Investments of between 20% and 50% (associated companies), in which the group exercises a significant influence, are included in the consolidated 

financial statements in accordance with the equity method. 

Intercompany receivables, payables, transactions and cash flows are eliminated. 

Full consolidation In the case of consolidated subsidiaries with minority interests, 100% of all balance sheet and income statement items are 

included in the consolidated financial statements. The equity attributable to minority shareholders is shown as a separate component of shareholders‘ 

equity, and the profit attributable to minority shareholders is disclosed separately below the income statement. 

The assets and liabilities of newly acquired subsidiaries are included at their fair values in the consolidated financial statements as from the date of 

acquisition. In the case of companies acquired during the year, the income earned prior to the acquisition is not included in the consolidated income 

statement. 

Intercompany profits Profits resulting from intercompany transactions are eliminated insofar as the products and services concerned were not 

delivered to third parties on the balance sheet date. 

Valuation and accounting principles 

Foreign currencies Transactions in foreign currencies are translated into the respective local (functional) currency at the exchange rate ruling on the 

day of transaction, and monetary assets and liabilities at the year-end balance sheet rate. The resulting profits and losses are included in the income 

statement, with the exception of exchange differences on intercompany loans of an investment nature, which are taken directly to shareholders‘ 

equity. 

At the year-end the balance sheets of non-Euro group companies are translated into Euros at the year-end exchange rate, whilst the income 

statements and cash flow statements are translated into Euros at annual average rates. Translation differences arising from changes in exchange rates 

between the beginning and the end of the year as well as the difference resulting from translating the income statement at average exchange and 

the year-end rate are taken directly to shareholders’ equity. In the event of the divestment of a subsidiary, the relevant cumulative exchange rate 

differences from the sale are included in the income statement. 

Composition and valuation of balance sheet items 

Cash and cash equivalents include cash in hand, balances in postal and bank accounts, as well as short-term money market funds. 

Marketable securities are low-volatility securities and are designated as “financial assets at fair value through profit or loss”, since they are man- 

aged and their performance is evaluated on a fair value basis, in line with Saurer’s aim of yield enhancement. They are shown initially at cost and 

subsequently at fair value, which is the year-end quoted price where relevant. In the case of unquoted assets, standard valuation techniques based on 

market observable data are used to calculate the fair value. Changes in value are included in the income statement. 

Accounts receivable, trade and other receivables are included at cost, less impairment. Discounting is applied where material. 

Inventories Raw materials are valued at the lower of cost and market, using the weighted average cost method. Finished goods and work in process 

are valued at production cost, reduced to net realizable value should this be lower than cost. Provisions are made for items of reduced salability and 

excess stocks. Customer payments on account are deducted from inventories. 

Non-current financial assets comprise mainly loans, capitalized pension surplus and available-for-sale investments. The significant components are 

stated at fair value. Unquoted equity instruments held for strategic purposes, whose fair value cannot be measured reliably, are stated at cost. 

Derivative financial instruments are initially recorded at cost and are subsequently adjusted to fair value. With the exception of financial instru- 

ments which hedge a forecasted transaction (cash flow hedges) or intercompany loans of an investment nature, all adjustments in fair values are 

included in income. 

The purpose of hedge accounting is to match the impact of the hedged item and the hedging instrument in the income statement. To qualify for 

hedge accounting, the hedging relationship must meet several strict conditions concerning documentation, hedge effectiveness and reliability of 

measurement. If these conditions are not met, the transaction does not qualify as a hedge for accounting purposes. In this event fair value adjustments 

to the value of the derivative and the hedged item are made through the income statement. 

Saurer uses hedge accounting for cash flow hedges. These are used to protect future cash flows which have a high probability of occurring. The hedge 

instrument is recorded on the balance sheet at fair value (replacement cost) and any subsequent adjustments are booked in the hedging reserve in 

shareholders‘ equity. If the hedge relates to a transaction which will subsequently be recorded on the balance sheet, the adjustments cumulated under 

shareholders‘ equity at that time will be included in the initial book value of the asset or liability. In all other cases the cumulative changes in fair 

value of the hedging instrument that have been recorded in equity are included as a charge or credit to income when the forecasted transaction is 

recognized. 


PAGE 52 

ACCOUNTING POLICIES 

Property, plant and equipment is carried at purchase or production cost less appropriate depreciation. In the case of an impairment loss the 

appropriate charge is made to income. Where significant items of property, plant and equipment comprise individually significant components, each 

component is valued and depreciated separately. Depreciation is charged on a straight-line basis over the following periods: 

IT, office equipment 3–7 

Vehicles, tools 4–6 

Furniture, fittings and equipment 5–12 

Machinery 6–10 

Buildings : • interior constructions 12–25 

• exterior constructions 30–60 

Repair and maintenance costs are expensed directly to the income statement. Costs which give rise to an increase in value are capitalized and 

depreciated over the remaining useful life of the assets. 

Financing costs incurred in respect of the construction of property, plant and equipment are taken directly to the income statement. 

Government grants which are conditional on certain requirements being met are generally included in liabilities and released to the income 

statement in line with the depreciation of the relevant assets. 

Leased equipment Property, plant and equipment financed through long-term financial leasing contracts, and for which the company bears the 

major risks (finance leases), are capitalized and depreciated like other fixed assets. Depreciation is charged over the shorter of the assets‘ useful lives 

and the lease term unless there is reasonable certainly that ownership will be obtained by the end of the lease term. The present value of the 

corresponding lease obligations is included as a liability. 

Rental costs for short-term operating leases are charged directly to the income statement. Operating leases are not included in the balance sheet; the 

corresponding obligations are fully reported in the notes. 

Goodwill represents the portion of the acquisition price of an investment which cannot be allocated to separately identifiable assets and liabilities. 

It is stated at cost less accumulated amortization up to December 31, 2004 (in the case of goodwill related to business combinations prior to March 

31, 2004) and less any impairment losses. In the case of the acquisition of a non-Euro company, any goodwill arising is treated as an asset of that 

company, held in the related currency and translated to Euros at the closing rate for the year. 

The carrying value of goodwill is reviewed annually for the relevant cash-generating unit to which the goodwill has been allocated and also if there is 

an indication of impairment. A detailed valuation is performed using Discounted Cash Flow analysis over a five-year period. Any impairment losses are 

recognized immediately in the income statement and are not reversed subsequently. Further details are reported in Note 12. 

Negative goodwill resulting from a business combination is taken immediately to the income statement. 

Patents, licenses and trademarks including intangible assets identified in connection with business combinations are capitalized at cost and are 

written off on a straight-line basis over their useful life, not exceeding 10 years, unless a longer useful live can be proven. 

Provisions are set up for present obligations based on past events. The amount of the provisions is based on the expected use of funds for covering 

the obligations. 

Retirement and other employee benefits Saurer companies operate various plans for providing employees with retirement benefits, which 

conform to local circumstances and practice in the countries concerned. 

These include defined benefit and defined contribution plans, under which benefits are provided through separate funds, insurance plans or unfunded 

arrangements. For defined benefit plans, the amount charged to the income statement consists of current service cost, which includes the normal 

cost of financing benefits in respect of future years of service, as well as net interest on the assets or obligations. Contributions to defined contribution 

pension schemes are charged to the income statement as incurred. For funded plans, plan assets are held separately from those of the group in inde- 

pendently administered funds. The group‘s liability to pay future retirement benefits is determined using the “projected unit credit method“ in 

accordance with IAS 19 (revised), and is provided in the group‘s balance sheet. Actuarial gains and losses are amortized over the average remaining 

period of employment, insofar as they exceed 10% of the higher amount of the present value of the benefits and of the plan assets. Actuarial 

calculations are performed generally on an annual basis. 

The additional costs for early retirement and reduced working hours are provided for at the time of the respective agreement. 

Employee stock options are valued based on the Black-Scholes option pricing model, using volatility rates based on historically observed prices of 

the underlying equity and risk-free interest rates based on Swiss Government bonds with similar maturities. The rate of employee fluctuation is based 

on experience figures. The cost is booked to the income statement over the vesting period. Thereafter any changes in the fair value of cash-settled 

options are also taken to the income statement. 

Convertible bond The convertible bond includes a liability and an equity component. At the time of issue the equity component is booked directly 

to shareholders‘ equity. The difference between the liability and the nominal value is treated as interest expense over the duration of the loan on the 

amortized cost basis. 

Own equity instruments Saurer‘s holdings in its own shares (treasury shares) and derivatives on Saurer shares (options) are deducted from share- 

holders‘ equity. The original cost of treasury shares and options and consideration received from the sale of treasury shares and options are booked 

directly in shareholders‘ equity. 

Consolidated financial statements Saurer 2005 

Years

Composition of items in the income statement 


Sales Revenues from products sold or services rendered are stated without turnover or value added tax, net of allowances, and are recognized when 

title is passed to the customer, which is generally on shipment. 

Research and development Research and development costs are charged to the income statement insofar as the conditions for capitalization in 

accordance with IAS 38 are not fulfilled. Only the costs for the development of new products and the further development of existing products are 

capitalized. 

Income taxes Liabilities for taxes on income are calculated and provided for, irrespective of their maturity, on the basis of the substantially enacted 

tax rates of the relevant companies. Deferred taxes on differences between group and tax valuations as well as eliminations with an effect on the 

income statement are accounted for in accordance with the liability method. Deferred tax assets and liabilities are offset insofar as this is legally per- 

missible. The movements in deferred income taxes in connection with temporary differences where the movement is taken directly to equity (e.g. cash 

flow hedges and foreign exchange differences on equity loans) are also taken to equity. 

Tax effects from tax loss carryforwards are taken into account if it can be reasonably expected that they will be realized. 

Provisions for non-recoverable withholding taxes are set up in respect of retained earnings at group companies, as soon as a distribution of profits is 

planned. 

Segment reporting 

The primary segments reported in Note 1 (business segments) correspond to the structure of the internal management reporting. The secondary 

segment reporting is by geographical regions. Further details of the definitions of the segments are reported in Note 1. 

Management judgments made in applying accounting policies 

The application of Saurer’s accounting policies may require management to make judgments, apart from those involving estimates, that may have a 

significant impact on the consolidated financial statements. 

Key assumptions and estimates 

In preparing the consolidated financial statements management is required to make assumptions and estimates that affect the reported amounts of 

certain assets, liabilities, income or expense. The assumptions and estimates are based on experience and available information. Actual results may 

differ from these estimates. 

The following significant items are based on assumptions or estimates: 

Property, plant and equipment and Intangible assets 

The value of property, plant and equipment reported in the balance sheet as of December 31, 2005 is EUR 376m and of intangible assets EUR 129m, 

of which EUR 116m relates to goodwill. A detailed impairment test is made annually for goodwill, and also, as in the case of the other assets such as 

land and buildings, if there is any indication of a possible impairment. Impairment tests are based on estimated future cash flows. The actual cash 

flows could vary significantly from these estimates, as a result of changes in the planned use of assets such as land and buildings, technical obsolescence 

or competition. 

Long-term employee benefits 

Provisions for long-term employee benefits amount to EUR 179m. Post-employment benefits are based on actuarial calculations. The assumptions 

underlying these calculations are reported in Note 15. Changes in these assumptions, such as the discount rate, future salary increases or changes in 

the life expectancy of the plan participants could have a significant impact on the provisions reported. 

Deferred income taxes 

Deferred income tax assets amounting to EUR 31m and deferred tax liabilities amounting to EUR 18m are based on the tax rates expected to be 

applicable when the relevant temporary differences are realized. In addition, deferred tax assets assume that there will be sufficient taxable income in 

relevant future periods to recover assets from tax loss carryforwards or temporary differences. Value adjustments have been made to take account of 

the possible non-recoverability of these assets. Changes in income tax rates or in tax laws could have a significant effect on these assets and 

liabilities. 


PAGE 54 

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

Except where otherwise noted, currency amounts are stated in EUR 000, and are restated for 2004 to exclude discontinued operations. 

1 Segment information 

Saurer Textile Solutions is active in the development and manufacture of yarn-making solutions for the natural and synthetic fiber industry; Trans- 

mission Systems is engaged in the development and manufacture of transmission systems for motor vehicles. The reconciliation to Total Saurer in- 

cludes central headquarter costs such as Corporate Management, Corporate Communications and Internal Audit. This presentation is in line with 

internal management reporting. The difference between the segment operating profit and the net profit for the group is shown in the consolidated 

income statement. There are no significant sales transactions between the divisions. The prior year figures have been restated as mentioned on pages 

49 and 50. 

By division: 

Saurer Textile Solutions 2005 % 2004 % 

Sales 1 172 656 100.0 1 209 410 100.0 


Research and development 67 075 5.7 69 818 5.8 



Segment assets (operating assets) 714 172 627 359 

Segment liabilities (operating liabilities) 314 910 328 408 

Number of employees (full-time equivalents at year-end) 1) 7 099 5 861 


Sales 397 130 100.0 383 690 100.0 







Number of employees (full-time equivalents at year-end) 2 905 2 970 

Reconciliation to Total Saurer (Corporate and Other) 

Operating loss –6 062 –5 934 

Capital expenditure 45 36 

Depreciation and amortization 133 186 



Number of employees (full-time equivalents at year-end) 17 21 

Total Saurer (Continuing operations) 

Sales 1 569 786 100.0 1 593 100 100.0 





Segment assets (operating assets) 1 047 422 979 034 

Unallocated assets / eliminations 217 657 321 867 

Total assets 1 265 079 1 300 901 


Unallocated liabilities / eliminations 258 751 317 186 

Total liabilities 690 103 784 176 




NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS PAGE 55 

By geographical region: 2005 2004 

Sales (by location of customer) 1 569 786 1 593 100 

Europe 504 451 470 792 

NAFTA 192 519 162 378 

South America 67 543 73 933 

Africa, Middle East 187 433 220 194 

Far East, Asia 617 840 665 803 


Europe 54 017 49 533 

NAFTA 544 560 

South America 18 180 

Africa, Middle East 150 – 

Far East, Asia 23 572 8 853 

Total Assets 1 265 079 1 300 901 

Europe 1 085 926 1 178 126 

NAFTA 45 840 43 305 

South America 4 858 3 201 

Africa, Middle East 1 269 – 

Far East, Asia 127 186 76 269 


Europe 7 483 7 278 

NAFTA 233 226 

South America 50 35 

Africa, Middle East 34 – 

Far East, Asia 2 221 1 313 



PAGE 56 


2 Administration and other 2005 2004 

Administration and other includes the following items: 

Amortization of goodwill – –7 347 

Gain on sale of fixed assets (net) 290 12 472 

Loss on divestment of activities, excluding discontinued operations – –2 451 

Employee stock option plan –2 282 –2 294 

3 Operating profit 2005 2004 

The operating profit is stated after deducting the following: 

Wages and salaries –294 094 –317 583 

Social expenses and other personnel expenses –93 994 –97 597 

Personnel expenses –388 088 –415 180 

Cost of materials –824 316 –809 102 

Depreciation and amortization –63 919 –73 124 

Payments made under operating leases –4 047 –3 338 

Rental expense – non-cancelable rental contracts –4 112 –4 287 

4 Financial expense (net) 2005 2004 

Net income from financial assets at fair value through profit or loss 1 512 525 

Interest expense from 2 1 /4% convertible bond 2000–2005 (Note 13) –1 778 –3 798 

Net interest expense from pension plans (Note 15) –7 880 –8 541 

Other interest expense –3 260 –3 729 

Interest income 3 596 3 299 

Expenses from foreign exchange differences (net) –1 206 –2 127 

Loss on repurchases of convertible bond (Note 13) –16 –135 

Other financial expense (net) –730 –2 095 

Total financial expense (net) –9 762 –16 601 

Interest expense relating to the 2 1 /4% convertible bond 2000–2005 is shown as for an equivalent loan without conversion rights, in accordance with 

IAS 32. The loss on repurchase of the convertible bond represents the difference between the liability value repurchased and the cash price paid (see 

also Note 13). 

The financial assets at fair value through profit or loss are mainly marketable securities. 

5 Income taxes 2005 2004 

Current income taxes –20 053 –9 876 

Deferred income taxes –3 314 –16 614 

Total income taxes –23 367 –26 490 

Using the tax rate of 24.3% (2004: 24.3%) at the company‘s headquarter location (Saurer Ltd., Arbon, Switzerland) applied to the profit before tax 

of EUR 78.5m (2004: EUR 75.6m), an expected tax charge of EUR 19.1m (2004: EUR 18.4m) results. The effective tax charge differs from the expected 

tax charge for the following reasons: 


5 Income taxes (continued) 


Deferred tax assets and liabilities arise due to differences between the group and tax valuations in the following balance sheet items: 

Assets 

31.12.2005 31.12.2004 

Tax Tax Tax Tax 

assets liabilities assets liabilities 

Accounts receivable 481 1 607 1 233 1 438 

Inventories 2 903 1 137 3 125 984 

Financial assets 5 066 3 122 659 8 535 

Property, plant and equipment 9 054 32 505 9 759 34 964 

Intangible assets 31 367 – 40 006 982 

Liabilities 

2005 2004 

Profit before taxes 78 527 75 647 

Tax rate, Saurer Ltd. 24.3% 24.3% 

Expected tax charge –19 082 –18 382 

Variance due to differing local tax rates –2 129 –5 836 

–21 211 –24 218 

Effect of income not taxed and expenses not accepted for tax purposes –738 –259 

(Under) overprovision for prior year taxes –859 3 406 

Effect of tax losses and changes in value adjustments of deferred tax assets –119 –7 925 

Effect of changes in tax rate 571 178 

Other influences –1 011 2 328 

Effective tax charge –23 367 –26 490 

Effective tax rate 29.8% 35.0% 

Accounts payable 81 418 114 154 

Other short-term liabilities 4 634 338 6 665 2 311 

Long-term provisions including pension liabilities 11 082 1 996 13 077 1 696 

Other long-term liabilities 2 070 1 109 6 176 1 834 

Deferred taxes from temporary differences 66 738 42 232 80 814 52 898 

Offset of deferred tax assets and liabilities –23 874 –23 874 –27 160 –27 160 

Net deferred taxes from temporary differences 42 864 18 358 53 654 25 738 

Deferred tax assets deriving from tax loss carryforwards 61 050 – 45 017 – 

Valuation allowances –72 837 – –63 830 – 

Total deferred taxes 31 077 18 358 34 841 25 738 

Development of deferred tax assets (liabilities): 2005 2004 

Deferred tax assets (net) as at 01.01. 9 103 24 386 

Charge to income –3 314 –16 614 

Credit to shareholders‘ equity 2 469 883 

Change in scope of consolidation 3 750 825 

Foreign currency translation 711 –377 

Deferred tax assets (net) as at 31.12. 12 719 9 103 

As at December 31, 2005 the group had tax loss carryforwards totaling EUR 190m (2004: EUR 158m) with a tax value of EUR 61m (2004: EUR 45m). 

Of the tax losses, EUR 27m expire by the year 2008, EUR 22m by the year 2012, a further EUR 18m expire later, and the remainder has no expiry date. 

The increase in tax loss carryforwards in 2005 is mainly the result of acquisitions. 


PAGE 58 


6 Discontinued Operations – Surface Technology 2005 2004 

Sales – 21 264 

Operating profit before sale of discontinued operations – 2 891 

Profit on sale of discontinued operations – 16 202 

Operating profit – 19 093 

Financial expense (net) – –208 

Profit before income taxes – 18 885 

Income taxes on ordinary activities – –513 

Income taxes on profit on sale of discontinued operations – –161 

Result from discontinued operations – 18 211 

Total assets – – 

Total liabilities – – 

Depreciation and amortization – 2 402 

Cash flow from operating activities – 8 851 

Cash flow from investing activities 

(including proceeds from divestment) 1 122 87 334 

Cash flow from financing activities – –265 

The North American and Asian companies of the Xaloy Group were sold on March 9, 2004 and the IonBond Group was sold on May 28, 2004. 

In addition to the EUR –161 tax charge on the profit on sale of discontinued operations in 2004, a further EUR –3 060, which would have been 

payable, was offset against tax losses which had been fully provided for. Part of the sale proceeds was received in 2005. 

7 Earnings per share 2005 2004 

Profit attributable to shareholders of Saurer Ltd. 53 392 66 774 

Average number of ordinary shares 15 090 769 15 430 000 

less: treasury shares (average) –731 327 –1 265 942 

Average number of shares in circulation 14 359 442 14 164 058 

Dilutive effect of employee stock options 82 294 89 115 

Average number of shares outstanding 

for the calculation of diluted earnings 14 441 736 14 253 173 

Basic earnings per share (EUR) 3.72 4.71 

Diluted earnings per share (EUR) 3.70 4.68 

8 Accounts receivable, trade 31.12.2005 31.12.2004 

Accounts receivable, trade 254 937 234 084 

Bills of exchange 6 069 6 412 

Provision for impairment –9 661 –13 811 

Total accounts receivable, trade (net) 251 345 226 685 

9 Inventories 31.12.2005 31.12.2004 

Raw materials 128 178 141 019 

Work in process 136 472 190 286 

Finished goods 99 437 87 528 

Provision for slow-moving and obsolescent inventories –47 752 –40 828 

Total inventories before customer payments on account 316 335 378 005 

Customer payments on account –84 415 –144 569 

Total inventories (net) 231 920 233 436 

Write-down of inventories recognized as expense in the period 6 310 9 109 



10 Non-current financial assets 31.12.2005 31.12.2004 

Available-for-sale investments 4 637 4 205 

Loans 6 744 7 716 

Capitalized pension surplus (Note 15) 4 027 4 020 

Other non-current financial assets 2 362 2 980 

Total financial assets 17 770 18 921 

The available-for-sale investments are mainly unquoted equity investments held for strategic purposes, which are measured at cost, as their fair value 

cannot be measured reliably. 

11 Property, plant and equipment 

Prepayments, 

Land and Machinery and assets under 

Cost buildings equipment construction Total 

Balance as at 01.01.2004 405 924 793 194 8 459 1 207 577 

Additions 3 078 46 533 8 645 58 256 

Disposals –23 955 –48 794 – –72 749 

Transfers – 7 866 –7 866 – 

Change in scope of consolidation –30 462 –97 848 –83 –128 393 

Foreign currency translation 411 284 –135 560 

Balance as at 31.12.2004 354 996 701 235 9 020 1 065 251 

Accumulated depreciation 

Balance as at 01.01.2004 –205 545 –611 814 – –817 359 

Depreciation –11 232 –53 068 – –64 300 

Disposals 13 502 46 774 – 60 276 

Change in scope of consolidation 15 649 66 634 – 82 283 

Foreign currency translation –516 –424 – –940 

Balance as at 31.12.2004 –188 142 –551 898 – –740 040 

Property, plant and equipment (net) 

Balance as at 01.01.2004 200 379 181 380 8 459 390 218 

Balance as at 31.12.2004 166 854 149 337 9 020 325 211 

Cost 

Balance as at 01.01.2005 354 996 701 235 9 020 1 065 251 

Additions 3 781 48 236 23 825 75 842 

Disposals –9 766 –27 822 – –37 588 

Transfers – 6 235 –6 235 – 

Change in scope of consolidation 20 852 18 838 47 39 737 

Foreign currency translation 2 405 6 098 1 306 9 809 

Balance as at 31.12.2005 372 268 752 820 27 963 1 153 051 

Accumulated depreciation 

Balance as at 01.01.2005 –188 142 –551 898 – –740 040 

Depreciation –11 717 –48 798 – –60 515 

Disposals 3 039 24 211 – 27 250 

Foreign currency translation –583 –3 289 – –3 872 

Balance as at 31.12.2005 –197 403 –579 774 – –777 177 

Property, plant and equipment (net) 

Balance as at 01.01.2005 166 854 149 337 9 020 325 211 

Balance as at 31.12.2005 174 865 173 046 27 963 375 874 


PAGE 60 

12 Intangible assets 


11 Property, plant and equipment (continued) 

Cost Goodwill Patents etc. Software Total 

Balance as at 01.01.2004 219 734 8 475 19 884 248 093 

Additions – 235 2 343 2 578 

Disposals – – – 2 134 –2 134 

Change in scope of consolidation –26 235 –2 124 –2 660 –31 019 

Foreign currency translation –752 28 29 –695 

Balance as at 31.12.2004 192 747 6 614 17 462 216 823 

Accumulated amortization 

Balance as at 01.01.2004 –102 929 –5 626 –14 874 –123 429 

Amortization - 7 817 –885 –2 524 –11 226 

Disposals – – 1 998 1 998 

Change in scope of consolidation 13 088 1 618 2 398 17 104 

Foreign currency translation 968 –16 –26 926 

Balance as at 31.12.2004 –96 690 –4 909 –13 028 –114 627 

Intangible assets (net) 

Prepayments, 

Land and Machinery and assets under 

buildings equipment construction Total 

Value of leased assets 28 177 906 – 29 083 

Insured values 622 959 1 172 853 – 1 795 812 

Assets pledged as collateral 36 229 

In prior periods software was disclosed together with tangible fixed assets. The prior year figures have been adjusted to include software with in- 

tangible assets (see also Note 12). 

Of the additions to tangible fixed assets in 2004 of EUR 58 256, EUR 1 708 relates to discontinued operations. Of the depreciation in 2004 of 

EUR –64 300, EUR –1 755 relates to discontinued operations. 

Saurer owns a number of industrial sites and office buildings which are no longer necessary for its operations. The value of these properties is largely 

dependent on their future use, and for this reason it is not possible to make a reliable assessment of their fair value. However, based on estimates, 

the proceeds from the possible sale of these properties are not expected to be below their book values. 

Balance as at 01.01.2004 116 805 2 849 5 010 124 664 

Balance as at 31.12.2004 96 057 1 705 4 434 102 196 


12 Intangible assets (continued) 


Cost Goodwill Patents etc. Software Total 

Balance as at 01.01.2005 192 747 6 614 17 462 216 823 

Additions – 174 2 285 2 459 

Disposals 7 133 –969 –1 282 4 882 

Change in scope of consolidation 19 661 7 510 623 27 794 

Foreign currency translation 2 326 19 138 2 483 

Balance as at 31.12.2005 221 867 13 348 19 226 254 441 

Accumulated amortization 

Balance as at 01.01.2005 –96 690 –4 909 –13 028 –114 627 

Amortization – –775 –2 628 –3 403 

Disposals –7 133 969 1 245 –4 919 

Foreign currency translation –2 165 –34 –109 –2 308 

Balance as at 31.12.2005 –105 988 –4 749 –14 520 –125 257 

Intangible assets (net) 

Balance as at 01.01.2005 96 057 1 705 4 434 102 196 

Balance as at 31.12.2005 115 879 8 599 4 706 129 184 

In prior periods software was disclosed together with tangible fixed assets. The prior year figures have been adjusted to include software with 

intangible assets (see also Note 11). 

In 2005 the plant in Carr Hill of Graziano Trasmissioni CH Ltd. was closed. Consequently the corresponding negative goodwill of EUR 7 133 which 

had previously been fully released to the income statement has been treated as a disposal. 

Of the additions to intangible assets in 2004 of EUR 2 578, none relates to discontinued operations. Of the amortization in 2004 of EUR –11 226, 

EUR –647 (including EUR -470 for goodwill amortization) relates to discontinued operations. 

Impairment testing 

Goodwill is allocated to cash-generating units that are expected to benefit from the business combination in which the goodwill arose and is tested 

annually for impairment using a discounted cash flow approach. Due to various changes in the financial and operating structure, the lowest levels of 

cash-generating units for goodwill testing are the reportable business segments as described in Note 1 on page 54. 

A segment-level summary of the goodwill allocation and amortization is presented below: 

2005 2004 

Saurer Textile Transmission Total Saurer Textile Transmission Total 

Solutions Systems Saurer Solutions Systems Saurer 

Amortization of goodwill – – – 6 074 1 273 7 347 

Impairment charge – – – – – – 

Goodwill balance as at 31.12. 107 637 8 242 115 879 87 815 8 242 96 057 

The recoverable amount used for impairment testing is based on the value-in-use and the most recent business plans approved by management. Cash 

flow projections covering a five-year period are used in the calculations. Cash flows beyond the five-year period are extrapolated using estimated 

growth rates of 1%. The discount rates used, 6.8% for Saurer Textile Solutions and 5.6% for Transmission Systems, are based on the weighted aver- 

age cost of capital of each business segment and reflect specific country and industry risks. Since the cash flows also take into account tax expense, 

post-tax discount rates are utilized. Use of the post-tax discount rates approximates the results of using a pre-tax rate applied to pre-tax cash flows. 

Scenarios are calculated based on lower than actually expected cash flow projections. In 2005 and 2004 no impairment charges were necessary. 

Of the EUR 19 661 goodwill added in 2005 through the change in the scope of consolidation, EUR 18 215 is in connection with acquisitions made 

after December 20, 2005, where the fair values assigned to the identifiable assets and liabilities could only be determined on a provisional basis. It is 

possible that this amount will be adjusted during 2006. No impairment tests on the basis of discounted cash flows have been applied to this portion 

of the goodwill, since it is a provisional value and the acquisitions are considered to have been made at market value. 


PAGE 62 


13 Debt 31.12.2005 31.12.2004 

Loans, mortgages and leasing liabilities secured over land and buildings 23 471 25 561 

Unsecured loans 11 920 15 927 

2 1 /4% convertible bond 2000–2005 – 82 703 

Total long-term debt 35 391 124 191 

Short-term debt 18 735 3 

Total debt 54 126 124 194 

The book values of the assets pledged to secure the loans amount to EUR 36 229 (2004: EUR 31 044). 

Bank Finance leases 

Maturities of long-term debt loans Mortgages (present value) Total Total 

Within 1 year (short-term portion) 5 761 450 4 120 10 331 92 635 

1 to 5 years 4 132 1 608 16 866 22 606 24 966 

After 5 years 2 027 – 427 2 454 6 590 

Total long-term portion 6 159 1 608 17 293 25 060 31 556 

Total long-term debt 11 920 2 058 21 413 35 391 124 191 

Short-term and long-term debt by currency 

EUR 47 795 41 356 

USD 11 41 

CHF 3 449 82 706 

Other currencies 2 871 91 

Total debt 54 126 124 194 

The minimum lease payments for the finance leases are as follows: 

Within 1 year 4 979 5 009 

1 to 5 years 18 557 19 332 

After 5 years 439 4 646 

Total minimum lease payments 23 975 28 987 

Interest charge –2 562 – 3 746 

Present value of finance leases 21 413 25 241 

The interest rates for debt as at December 31, 2005 are in the range of 2.5% to 5.05%. 

The movements in the convertible bond are as follows: 2005 2004 

Valuation of the liability as 01.01. 82 703 84 818 

Bond stock repurchased –1 829 –5 364 

Bond stock repayment –81 882 – 

Amortization of issue costs 353 703 

Interest expense (Note 4) 1 778 3 798 

Interest at 2 1 /4% –929 –1 961 

Foreign currency translation –194 709 

Valuation of the liability as at 31.12. – 82 703 

The 2 1 /4% convertible bond 2000–2005 was issued in June 2000 with an original nominal value of CHF 230m. In accordance with IAS 32 the conver- 

sion right was valued separately and reported in capital and legal reserves in shareholders‘ equity. In subsequent periods the liability component was 

presented on the amortized cost basis. The calculation of interest expense for the convertible bond is based on the effective market yield and the 

relative coupon of an equivalent bond without conversion right at the time of issue. 

During 2005, bond stock with a nominal value of CHF 2 850/EUR 1 840 was repurchased (2004: CHF 8 445/EUR 5 468). These transactions resulted 

in a book loss of EUR 16 (2004: EUR 135) (Note 4). 

The remaining convertible bond stock with a nominal value of CHF 126 805/EUR 81 882 was repaid at par in June 2005. 

The fair values of debt (excluding the convertible bond) do not differ significantly from the book values. As at December 31, 2004, the market value 

of the convertible bond was 100.40% of the nominal value. 


14 Provisions 


Warranty Restruc- 

costs turing Other Total 

Short-term provisions as at 01.01.2004 28 982 33 219 23 012 85 213 

Long-term provisions as at 01.01.2004 2 289 2 482 8 322 13 093 

Balance as at 01.01.2004 31 271 35 701 31 334 98 306 

Charge to income 15 784 15 328 14 401 45 513 

Utilization –11 808 –20 829 –11 725 –44 362 

Release to income –3 171 –4 255 –4 298 –11 724 

Reclass within provisions and (to) from other liabilities 69 –167 1 254 1 156 

Change in scope of consolidation –646 145 –1 327 –1 828 

Foreign currency translation –29 –300 –50 –379 

Balance as at 31.12.2004 31 470 25 623 29 589 86 682 


Long-term provisions as at 31.12.2004 1 694 157 7 384 9 235 

Charge to income 15 551 4 272 10 644 30 467 

Utilization –16 942 –20 853 –12 239 –50 034 

Release to income –4 172 –342 –3 676 –8 190 

Reclass within provisions and (to) from other liabilities 42 –80 1 611 1 573 

Change in scope of consolidation 1 002 1 200 2 461 4 663 

Foreign currency translation 246 321 206 773 

Balance as at 31.12.2005 27 197 10 141 28 596 65 934 


Long-term provisions as at 31.12.2005 600 1 366 8 021 9 987 

Short-term provisions are expected to be utilized during 2006. 

Long-term provisions are expected to be utilized as follows: 

1 to 5 years 600 1 366 7 979 9 945 

After 5 years – – 42 42 

Warranty provisions are calculated on the basis of current year sales volumes, adjusted for individual claims and experience of warranty costs in prior 

years. Restructuring provisions are made only for significant one-time projects which have been detailed, documented and communicated in 

accordance with IAS 37. 

Major restructuring projects were initiated in 2002 and 2003 within Saurer Textile Solutions, which have been mostly completed in 2005. A number 

of smaller restructuring projects were started in 2005. Transmission Systems launched restructuring projects in 2004 which resulted in significant 

payments during 2005. They are expected to be completed during 2006. 

Other provisions cover various risks in the normal course of business as well as risks in connection with divestments and legal claims. 


PAGE 64 


15 Long-term employee benefits 31.12.2005 31.12.2004 

Retirement and other post-employment benefits 166 539 158 586 

Other long-term employee benefits 12 384 16 243 

Total long-term employee benefits 178 923 174 829 

Obligations for retirement and other post-employment benefits 

Present value of unfunded obligations 152 376 128 677 

Present value of funded obligations 234 867 245 189 

Fair value of plan assets –225 566 –235 681 

Underfunding (net) 161 677 138 185 

Unrealized actuarial (losses) gains –27 216 –8 030 

Pension surplus not capitalized 28 051 24 411 

Underfunding (net) recognized in the balance sheet 162 512 154 566 

thereof as retirement and other post-employment benefits 166 539 158 586 

thereof included in non-current financial assets (Note 10) –4 027 –4 020 

Expense in income statement 2005 2004 

Current service cost 10 967 12 163 

Interest cost 15 326 17 596 

Expected net return on plan assets –9 579 –10 721 

Past service cost –80 –50 

Actuarial (gains) losses recognized in period –19 185 

Employee contributions –850 –874 

Other, including effect of pension surplus not capitalized 2 280 740 

Total charged to income 18 045 19 039 

Contributions to defined contribution plans 1 000 809 

Actual return on plan assets 19 214 11 433 

Development of balance sheet obligations 2005 2004 

Balance as at 01.01. 158 586 159 731 

Curtailments and settlements – –2 725 

Total pension expense as above 18 045 19 039 

Employer‘s contributions – 8 609 –7 329 

Pensions paid from unfunded plans –10 926 –10 132 

Change in scope of consolidation 8 802 – 

Reclass from other long-term employee benefits 615 – 

Foreign currency translation 26 2 

Balance as at 31.12. 166 539 158 586 

Assumptions used in actuarial calculations (weighted average) 

Discount rate 4.0% 4.5% 

Expected return on plan assets 4.3% 4.5% 

Future salary increases 1.7% 2.6% 

Future pension increases 1.5% 1.5% 

Other long-term employee benefits 2005 2004 

Balance as at 01.01. 16 243 18 325 

Service cost 1 717 4 152 

Benefits paid –5 030 –6 088 

Reclass to other liabilities –269 – 

Reclass to post-employment benefits – 615 – 

Foreign currency translation 338 –146 

Balance as at 31.12. 12 384 16 243 

Pension costs are included with personnel costs in the relevant income statement captions. The net interest cost from unfunded and underfunded 

pension plans is shown as a financial expense (Note 4), whereas the interest cost and expected net return on plan assets reported above also include 

the relevant data for fully funded plans. 



16 Share capital 31.12.2005 31.12.2004 

Share capital of Saurer Ltd. 85 853 110 228 

The share capital comprises 14 548 000 fully paid registered shares with a nominal value of CHF 9.50 (2004: 15 430 000 registered shares with a 

nominal value of CHF 11.50) each. The shares outstanding are entitled to one vote each. The share capital is translated into Euros at historical 

exchange rates. 

Authorized Capital 

The Board of Directors is authorized to increase the share capital up to May 12, 2006 through the issue of a maximum of 3 000 000 fully paid up 

registered shares with a nominal value of CHF 9.50 each, up to the maximum amount of CHF 28 500 000. Increases through firm underwriting or 

in partial amounts are approved. The issue price, the period of the entitlement to dividends and the type of consideration or the contribution or 

underwriting in kind shall be determined by the Board of Directors. The Board of Directors is authorized to exclude the subscription right of the share- 

holders and to allocate them to third parties in the event of the use of shares for the purpose of the acquisition of companies, parts of companies or 

investments, for mergers and exchange of investments as well as in the case of a share placement for the financing of such transactions. Subscription 

rights not exercised shall be sold by the Board of Directors at market conditions. 

Conditional Capital 

The share capital of the company shall be increased by the maximum amount of CHF 40 375 000 through the issue of 4 250 000 fully paid up regis- 

tered shares with a nominal value of CHF 9.50 each, of which 

a) up to an amount of CHF 28 500 000, representing 3 000 000 registered shares with a nominal value of CHF 9.50 each, will be issued through the 

exercise of option and conversion rights, which will be granted in connection with loans or other bonds of the company or of group companies or 

through the exercise of option rights granted to the shareholders; 

b) up to an amount of CHF 11 875 000, representing 1 250 000 registered shares with a nominal value of CHF 9.50 each, which are granted to the 

employees of the company or of group companies as a result of the exercise of stock option rights. 

The subscription right of the shareholders is excluded. Shareholders‘ preferential subscription rights may be limited or suspended in respect of options 

and convertible bonds by decision of Senior Management (1) to finance acquisitions, participations or other new investments or (2) where options or 

convertible bonds are issued in international capital markets. When shareholders‘ rights are suspended (1) the related bonds must be placed in the 

public domain at prevailing market conditions and (2) the exercise price for the new shares on conversion must be equal to the market price for shares 

when the bonds are issued. 

Conditions for authorized and conditional capital 

The number of the new shares to be issued on the basis of Articles 6 and 7 of the Articles of Incorporation of Saurer Ltd. may not exceed a total of 

5 000 000. 

Purchase and sale of treasury shares 2005 2004 

Number of registered shares 

Balance as at 01.01. 1 189 630 1 111 861 

Repurchase through exercise of put options – 881 580 

Capital reduction –882 000 – 

Purchase 8 898 114 561 

Sale –17 648 –846 002 

Sale from employee stock option programs –179 100 –72 370 

Balance as at 31.12. 119 780 1 189 630 

Treasury shares are held by Saurer Ltd. and also by a subsidiary company. 115 900 treasury shares are reserved for employee stock option plans (see 

Note 19). Purchases and sales of treasury shares occurred at market prices, excluding those repurchased through the exercise of put options in 2004. 

A resolution to reduce the share capital of Saurer Ltd. by canceling 882 000 shares was approved by the General Meeting of Shareholders on May 12, 

2005 and the cancellation became effective on August 10, 2005. 

Purchase and sale of call options on Saurer shares 

In 2004 Saurer acquired 700 000 American-type call options on Saurer shares issued by a bank and expiring on July 27, 2007. 504 000 of these 

options were sold to the Board of Directors (214 000), to Senior Management (148 000) and to other members of management (142 000) at market 

rates (see also Note 20). The number purchased by the individuals was not restricted. Of the remaining 196 000 options 87 000 were sold to third 

parties in 2004 and 109 000 to third parties in 2005. As at December 31, 2005 Saurer holds none of these options. Each option entitles the holder 

to purchase one share. In 2005 Saurer acquired 300 000 American-type call options on Saurer shares issued by a bank and expiring on March 17, 

2006. 200 000 were sold to third parties in 2005. The balance as at December 31, 2005 is 100 000. Twelve options entitle the holder to purchase one 

share. 


PAGE 66 


17 Changes in net working capital 2005 2004 

(Increase) decrease in accounts receivable, trade and other (net) –7 373 22 461 

Decrease (increase) in inventories (net) 16 364 –64 725 

(Decrease) increase in accounts payable, trade and other (net) –37 305 92 290 

Other changes in net working capital –11 398 – 12 003 

Total changes in net working capital –39 712 38 023 

18 (Acquisition) divestment of subsidiaries and other equity investments 2005 2004 

Acquisition of subsidiaries 

Cash 19 018 2 584 

Accounts receivable 13 185 784 

Inventories 16 400 369 

Property, plant and equipment 39 737 1 432 

Goodwill 19 661 1 439 

Other intangible assets 8 133 – 

Other assets 13 288 132 

Debt –35 225 – 

Other current liabilities –29 507 –1 450 

Non-current liabilities –10 149 – 

Minority shareholders‘ interests –7 966 – 

Net assets acquired 46 575 5 290 

Other (payment of installments for acquisitions made in previous years) – 2 616 

Acquisition price 46 575 7 906 

Paid in the year under review –42 676 –7 906 

Less cash acquired 19 018 2 584 

Cash flow from acquisition of subsidiaries –23 658 –5 322 

Cash flow from acquisition of other equity investments –1 199 –1 521 

Cash flow from acquisition of subsidiaries and other equity investments –24 857 –6 843 

Divestment of subsidiaries 

Selling price (net of transaction costs) – 110 638 

Received in the year under review 11 808 96 675 

Less cash divested – –7 553 

Cash flow from divestment of subsidiaries 11 808 89 122 

Cash flow from divestment of other equity investments 163 113 

Cash flow from divestment of subsidiaries and other equity investments 11 971 89 235 

Net cash flow from (acquisition) divestment of subsidiaries and other equity investments –12 886 82 392 

The net assets divested comprise the following: 

Cash – 7 553 

Accounts receivable – 19 100 

Inventories – 28 065 

Property, plant and equipment – 48 437 

Goodwill – 14 990 

Other assets 1) – 30 141 

Current liabilities 1) – –54 984 

Non-current liabilities 1) – –72 213 

Net assets divested (translated at period-end rates at the date of divestment) – 21 089 

1) Including intercompany accounts of Saurer settled from proceeds. 

In January 2005 Saurer acquired 51% of Autefa automation GmbH, Germany, and a further 9% in October 2005. 100% of the following companies 

was also acquired in 2005: Kortec GmbH, Germany (April, subsequently merged into Saurer GmbH & Co. KG), ERMAFA Kunststofftechnik Chemnitz 



GmbH, Germany (July), Fehrer GmbH, Austria (September), Heberlein Fasertechnologie AG, Switzerland (December), Electrotex AG, Switzerland 

(December), Enka tecnica GmbH, Germany (December) and Fincarde S.p.A., Italy (December). In December 2005 Saurer founded jointly with Jinsheng 

the companies Saurer Jintan Textile Machinery Company Ltd., China, and Jintan Texparts Component Company Ltd., China, in both of which Saurer 

holds 70%. 

Since most of the subsidiaries acquired did not report in accordance with IFRS before their acquisition by Saurer, it is not practicable to disclose the 

values of their assets and liabilities in accordance with IFRS immediately before acquisition. For acquisitions made in December 2005 the fair values 

assigned to the identifiable assets and liabilities could only be determined on a provisional basis. It is possible that they will be adjusted during 

2006. 

The companies acquired during 2005 contributed EUR 41.9m to Saurer‘s sales and EUR 0.8m to Saurer‘s profit for the period. The effect of consolidating 

all of the companies acquired during 2005 for the whole of the year 2005 would have been an estimated increase in Saurer‘s sales by EUR 70.3m and 

an estimated decrease in Saurer‘s profit for the period of EUR 6.8m. 

No subsidiaries were divested during 2005, but cash was received in connection with divestments made in previous years. 

In 2004 Saurer acquired M&J Fibretech A/S, Denmark, and paid the final installment for Graziano Trasmissioni CH Ltd., UK, which was acquired in 

2001. In 2004 Saurer also acquired Surface Metallurgical, Inc., Canada, which was subsequently resold as part of the divestment of the IonBond 

Group. During 2004 the North American and Asian companies of the Xaloy Group, the IonBond Group and the Elektro activities of Barmag were 

sold. 

19 Employee stock options 

Saurer maintains a long-term program for employee stock options. The shares required to cover this program were purchased on the market. As at 

December 31, 2005 the total number of treasury shares reserved for this purpose was 115 900. The conditional capital, which is also available for this 

program (Note 16), has not been used to date. The options outstanding as at December 31, 2005 have exercise prices of CHF 21.25 and CHF 50.25. 

The exercise prices correspond to the market prices at the time of issue. They are not adjusted (no repricing), except for reductions equal to the reduc- 

tions of the nominal share value (dilution protection). When issued, half of the options are blocked for 2 and the other half for 3 years. All options 

expire after 5 years. 

Each option entitles the owner to the equivalent of one Saurer share for the exercise price, or cash compensation for the difference between market 

price and exercise price. 

Saurer issued no stock options during 2004 and 2005. At December 31, 2005 the following options were outstanding: 

Year Exercise Expiry Senior Board of 

Number of Options granted Price CHF 1) date Employees 2) Management 2) Directors 2) Total 

Options held 2003 50.25 08.02.2007 61 400 27 250 15 000 103 650 

Total number of 

2002 21.25 19.11.2008 5 250 – 7 000 12 250 

options outstanding 66 650 27 250 22 000 115 900 

1) Exercise prices have been and will be adjusted over the years parallel to changes in nominal value of the stock. In 2005 the exercise price of both remaining option programs was reduced by CHF 2.00. 

2) Including former members and employees. 


PAGE 68 


Movements in the number of employee stock options outstanding are shown in the following table: 

Senior Board of 

Employees 1) Management 1) Directors 1) Total 

Options outstanding as at 01.01.2004 185 900 150 000 128 220 464 120 

Options granted – – – – 

Options exercised –30 650 –24 500 –17 220 –72 370 

Options expired / canceled –11 950 –39 000 –37 500 –88 450 

Options outstanding as at 31.12 2004 143 300 86 500 73 500 303 300 

Options granted – – – – 

Options exercised –69 350 –58 250 –51 500 –179 100 

Options expired / canceled –7 300 –1 000 – –8 300 

Options outstanding as at 31.12.2005 66 650 27 250 22 000 115 900 

1) Including former members and employees. 

Weighted Expense Of which Payments 

Number average share in income Year end accrued for to option 

of options price at statement accrual vested options holders 

Additional information Year exercised exercise date EUR 000 EUR 000 EUR 000 EUR 000 

2004 72 370 CHF 63.44 2 294 2 923 1 745 1 803 

2005 179 100 CHF 79.49 2 282 2 259 1 691 2 953 

The accrual and expense for employee stock options are valued based on the Black-Scholes option pricing model. For the calculation volatility rates 

were based on historically observed prices of the underlying equity, and risk-free interest rates were based on Swiss Government bonds with similar 

maturities. 

20 Related parties 

Compensation of Board of Directors and Senior Management 

Short-term employment Other long-term Share-based Total 

2004 benefits 1) benefits benefits 2) compensation 3) compensation 

Current (non-executive) Board Members 538 – 178 224 940 

Current Senior Management (total) 2 278 310 232 567 3 387 

Highest individual compensation of Senior Management 1 128 162 156 261 1 707 

2005 

Current (non-executive) Board Members 599 – 356 292 1 247 

Current Senior Management (total) 1 657 329 443 781 3 210 

Highest individual compensation of Senior Management 736 161 312 352 1 561 

1) Including consultancy fees. 

2) Long-term retention bonus accrued. Payment will be made in 2007. 

3) Cash payment received by option holders in period when options are exercised. 

In 2004 a company controlled by one of the members of the Board of Directors charged consulting fees of EUR 38 (2005: EUR –) to Saurer. 

In 2004 members of Senior Management received advance facilities on a 2007 long-term bonus to purchase stock options issued by a bank (see Note 

16). At December 31, 2005 the net balance outstanding on these advance facilities was EUR 615 (2004: EUR 1 275). The amounts are interest-free 

and unsecured. 

As at December 31, 2005 and 2004 no amounts were receivable from or payable to the Saurer Pension Fund in Switzerland (“Pensionskasse der 

Saurer-Unternehmungen“). At December 31, 2005 the Saurer Pension Fund in Switzerland held no (2004: 6 612) registered shares of Saurer Ltd. 



21 Contingent liabilities 31.12.2005 31.12.2004 

Discounted notes 2 269 2 472 

Guarantees in favor of third parties 6 232 6 866 

Others 1 666 1 046 

Total contingent liabilities 10 167 10 384 

The management and employees of Saurer are committed to complying with local laws and regulatory requirements in the course of their business 

activities. As of the date of this report, Saurer is not involved in any litigation and is not aware of any pending litigation which could have a material 

impact on the consolidated financial statements. 

22 Financial risk management and derivative financial instruments 

Financial risk management 

Saurer‘s international activities are exposed to a variety of market risks, including currency risks. An overall risk management policy coordinated by 

central corporate treasury seeks to mitigate the effects of unpredictable financial markets on the financial results of the group. 

Currency risks 

Currency risks, which, owing to the group‘s activities, mainly arise in U.S. Dollars, are hedged by using forward contracts and swaps. Foreign currency 

risks which arise from the translation of income statement and balance sheet items of foreign consolidated companies are generally not hedged. 

Interest rate risks 

The group‘s liquid assets are invested generally on a short-term basis. The group‘s income and operating cash flows are substantially independent of 

changes in market interest, and interest exposures are generally not hedged. In connection with a sale and leaseback transaction, however, interest 

rate swaps have been set up. 

Credit risks 

Liquid assets are placed short-term with first-class banks only. The credit risk pertaining to accounts receivable is limited by the wide spread of 

customers, both geographically and by business activity. International accounts receivable, mainly in the textile business, are to a large extent secured 

by letters of credit and government export credit guarantees. 

Fair value risks 

Investments in low-volatility marketable securities are designated as ”financial assets at fair value through profit or loss“ since they are managed and 

their performance is evaluated on a fair value basis, in line with Saurer‘s aim of yield enhancement. Risks in the fair value of such marketable securities 

due to currency fluctuations are generally hedged with short-term forward contracts on a rolling basis. 

Commodity price risks 

The price risks related to tradeable commodities used in Saurer products are low and are generally not hedged. 

At December 31 the following types of financial instruments were held: 

The positive and negative fair values are included in the balance sheet in other receivables and payables respectively. 

Of the forward volume in 2005, EUR 304m is the gross sum of external foreign exchange swaps offsetting each other and mainly designed to hedge 

intercompany financing risks and investments in marketable securities. 

All of the currency related instruments mature within one year. Interest rate swaps with a contract amount of EUR 7.5m run until 2007, and the 

remaining interest rate swaps run until 2010. The contract amount indicates the volume of business outstanding at the balance sheet date and does 

not represent amounts at risk. 

2005 2004 

Currency related Contract Positive Negative Contract Positive Negative 

instruments amount fair values fair values amount fair values fair values 

Forward foreign exchange rate contracts 376 893 986 –5 063 441 250 15 181 –2 907 

Over the counter currency options 26 614 70 –187 173 622 1 548 –2 000 

Cross currency swaps 2 126 – – 90 2 127 115 – 

Total of currency related instruments 405 633 1 056 –5 340 616 999 16 844 –4 907 

Interest rate swaps 25 368 – –381 38 579 – –637 


PAGE 70 


The table below shows the movements in the hedging reserve in shareholders‘ equity in respect of cash flow hedges: 

2005 2004 

Balance as at 01.01. 7 520 6 524 

Changes in fair value –2 270 9 593 

Realized gains transferred to the income statement –11 170 –8 073 

Deferred tax effect 4 917 –542 

Foreign currency translation –354 18 

Balance as at 31.12. –1 357 7 520 

In 2005 Saurer acquired a call option to acquire a 75% holding in a company in the textile components business in 2009 or 2010, at a price based 

on the higher of a multiple of the company‘s EBITDA in 2008 or 2009 and GBP 4m. At the same time Saurer granted a put option which obliges it to 

acquire a 75% holding in the company at a price based on the lower of a multiple of the company‘s EBITDA in 2008 or 2009 and GBP 6m. The 

multiple is considered to be a reasonable estimation of the fair value. Therefore neither option has a value and hence no asset or liability was 

recognized. 

23 Other financial obligations 

As at December 31, 2005 obligations for future capital expenditure amounted to EUR 6 327 (2004: EUR 6 107). 

Due within Due within Due after 

Future obligations from: 1 year 1 to 5 years 5 years 

Non-cancelable operating leases 3 274 3 204 1 

Non-cancelable rental contracts 4 122 11 748 2 907 

Total other financial obligations 7 396 14 952 2 908 

24 Events subsequent to the balance sheet date 

On January 27, 2006 Saurer acquired 100% of Fairfield Manufacturing Company, Inc., USA, a company operating in the Transmission Systems 

business. On February 1, 2006 Saurer acquired certain operating activities of TEMCO, Germany, a company operating in the textile components 

business. The expected cash outflow for these acquisitions is EUR 165m. In 2005 Fairfield reported sales of approximately EUR 185m. The activities of 

TEMCO are expected to contribute approximately EUR 10m to Saurer‘s sales in 2006. As at the date of this report it is not practicable to quantify any 

other effects of these acquisitions on Saurer‘s financial statements for 2006. 

25 Main currency rates applied 2005 2004 

Income Balance Income Balance 

Currency statement sheet statement sheet 

1 CHF 0.65 0.64 0.65 0.65 

1 USD 0.81 0.85 0.81 0.73 

1 GBP 1.46 1.46 1.47 1.42 

1 CNY 0.10 0.11 0.10 0.09 

These financial statements were authorized for issue by the Board of Directors of Saurer Ltd. on March 1, 2006. A resolution to approve the financial 

statements will be proposed at the General Meeting of Shareholders on May 11, 2006. 


PRINCIPAL COMPANIES AND INVESTMENTS PAGE 71 

Share % share- Consol- 

Company Location Currency capital holding idation Function 

Group 

Saurer Ltd. Arbon, CH CHF 138 206 000 C ■ 

S.B. Holding, Inc. Panama, Republic of Panama 1) 100 C ■ 

Saurer Group Investments Ltd. George Town, Grand Cayman CHF 474 469 301 100 C ■ 

Saurer Management AG Winterthur, CH CHF 100 000 100 C ● 

Saurer Holding, Inc. Denver, CO, US USD 5 058 000 100 C ■ 

Saurer Holding GmbH Leonding, AT EUR 35 000 100 C ■ 

SAC Saurer Automotive Components BV Rotterdam, NL EUR 11 344 505 100 C ■ 


Aktiengesellschaft Adolph Saurer Arbon, CH CHF 10 000 000 100 C ■ 

Autefa automation GmbH Friedberg, DE EUR 25 000 60 C ● ● ■ 

Beijing Barmag Machinery Co. Ltd. Beijing, CN CNY 6 619 000 60 C ● ● ■ 

Electrotex AG Wattwil, CH CHF 600 000 100 C ● ● ● ■ 

Enka tecnica GmbH Heinsberg, DE EUR 511 300 100 C ● ● ● ■ 

ERMAFA Kunststofftechnik Chemnitz GmbH Chemnitz, DE EUR 50 000 100 C ● ● ■ 

Fehrer GmbH Leonding, AT EUR 600 000 100 C ● ● ■ 

Fincarde S.p.A. Biella, IT EUR 1 609 758 100 C ● ● ● ■ 

Heberlein Fasertechnologie AG Wattwil, CH CHF 1 000 000 100 C ● ● ● ■ 

Jintan Texparts Component Company Ltd. Jintan, CN USD 5 062 289 70 C ● ■ 

M&J Fibretech A/S Horsens, DK DKK 42 000 000 100 C ● ● ■ 

Melco Industries, Inc. Denver, CO, US USD 2 407 000 100 C ● ● ■ 

Saurer Beteiligungs AG Mönchengladbach, DE EUR 250 000 49 C ■ 

Saurer China Equity Ltd. Hong Kong, CN HKD 10 100 C ■ 

Saurer China Investments Ltd. Hong Kong, CN HKD 266 052 000 100 C ■ 

Saurer (China) Technology Co. Ltd. Suzhou, CN USD 23 908 500 100 C ● ■ 

Saurer Czech Republic s.r.o. Cerveny ´ Kostelec, CZ CZK 30 000 000 100 C ● ● ■ 

Saurer do Brasil Máquinas Ltda. São Leopoldo, BR BRL 18 588 000 99 C ● ■ 

Saurer Far East Ltd. Hong Kong, CN HKD 100 000 100 C ■ 

Saurer GmbH & Co KG Mönchengladbach, DE EUR 41 000 000 100 C ● ● ● ■ 

Saurer Hamel AG Arbon, CH CHF 14 160 000 100 C ● ● ■ 

Saurer India (Private) Ltd. Mumbai, IN INR 50 000 000 100 C ■ ● ■ 

Saurer Jintan Textile Machinery Company Ltd. Jintan, CN USD 22 482 422 70 C ● ● ■ 

Saurer Middle East Tekstil Makinalari A.S. Makinalari, TR TRY 50 000 100 C ● ■ 

Saurer Textile Machinery (Wuxi) Co. Ltd. Wuxi, CN CNY 58 059 000 100 C ● ● ■ 

Saurer Textile Systems (Suzhou) Co. Ltd. Suzhou, CN CNY 14 906 000 100 C ● ■ 

Saurer Verwaltungs GmbH Mönchengladbach, DE EUR 250 000 49 C ■ 

Saurer, Inc. Charlotte, NC, US USD 3 000 000 100 C ● ■ 

Schlafhorst Electronics GmbH Mönchengladbach, DE EUR 1 050 000 51 C ● ● ■ 

Texparts GmbH Fellbach, DE DEM 50 000 100 C ● ● ■ 

Texparts Manufacturing Singapore Pte. Ltd. Singapore, SG SGD 1 000 000 100 C ● ● ■ 

W. Reiners Verwaltungs GmbH Mönchengladbach, DE DEM 75 000 000 100 C ■ 


Graziano Trasmissioni Engineering S.p.A. Cascine Vica Rivoli, IT EUR 1 500 000 100 C ● ■ 

Graziano Trasmissioni CH Ltd. Doncaster, UK GBP 40 000 100 C ● ■ 

Graziano Trasmissioni India Ltd. New Delhi, IN INR 280 000 000 100 C ● ■ 

Graziano Trasmissioni North America, Inc. Duluth, GA, US USD 1 100 C ■ 

Graziano Trasmissioni S.p.A. Cascine Vica Rivoli, IT EUR 44 300 000 100 C ● ● ■ 

Graziano Trasmissioni Group S.p.A. Cascine Vica Rivoli, IT EUR 50 000 000 100 C ■ 

Graziano Trasmissioni UK Ltd. Cambridge, UK GBP 40 000 100 C ■ 

I.T.T. S.r.l. Cervere, IT EUR 5 000 000 100 C ● ■ 

GTG-Graziano Trasmissioni Group AG Arbon, CH CHF 250 000 100 C ● ■ 

1) Shares without par value. 

Consolidation method: 

C = Full consolidation 

Financial companies ■ 

Services ● 

Research and development ● 

Production ● 

Marketing and sales ■ 


PAGE 72 

REPORT OF THE GROUP AUDITORS 

Report of the group auditors 

to the general meeting of Saurer Ltd., Arbon 

As auditors of the group, we have audited the consolidated financial statements (income statement, balance sheet, cash flow statement, statement 

of shareholders’ equity and notes to the consolidated financial statements, on pages 45 to 71) of Saurer Ltd. for the year ended December 31, 

2005. 

These consolidated financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these con- 

solidated financial statements, based on our audit. We confirm that we meet the legal requirements concerning professional qualification and inde- 

pendence. 

Our audit was conducted in accordance with Swiss Auditing Standards and with the International Standards on Auditing, which require that an audit 

be planned and performed to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. 

We have examined on a test basis evidence supporting the amounts and disclosures in the consolidated financial statements. We have also assessed 

the accounting principles used, significant estimates made and the overall consolidated financial statement presentation. We believe that our audit 

provides a reasonable basis for our opinion. 

In our opinion, the consolidated financial statements give a true and fair view of the financial position, the results of operations and the cash flows in 

accordance with the International Financial Reporting Standards (IFRS) and comply with Swiss law. 

We recommend that the consolidated financial statements submitted to you be approved. 

PricewaterhouseCoopers AG 

Daniel Ketterer Beat Inauen 

St. Gallen, March 1, 2006 

Report of the group auditors Saurer 2005

MULTIPLE YEAR COMPARISON

PAGE 74 


Income Statement (EUR 000) 2005 2004 1)2) 2003 2) 2002 2) 2001 2) 

Sales 

Saurer Textile Solutions 1 172 656 1 209 410 1 275 371 1 211 521 1 189 401 

Transmission Systems 397 130 383 690 363 009 380 172 282 208 

Total sales 1 569 786 1 593 100 1 638 380 1 591 693 1 471 609 

Gross profit 315 229 341 030 366 002 369 432 330 246 

Operating expenses before impairment charge –226 940 –248 782 –281 197 –296 073 –307 025 

Operating profit before impairment charge 88 289 92 248 84 805 73 359 23 221 

Impairment charge – – – – –50 838 

Operating profit (loss) 88 289 92 248 84 805 73 359 –27 617 

of which Saurer Textile Solutions 62 850 76 027 62 207 37 215 –58 170 


Financial expense (net) –9 762 –16 601 –16 882 –13 389 –13 675 

Profit (loss) before income taxes 78 527 75 647 67 923 59 970 –41 292 

Income taxes –23 367 –26 490 –21 999 –19 701 –1 978 

Profit (loss) from continuing operations 55 160 49 157 45 924 40 269 –43 270 

Result from discontinued operations – 18 211 2 595 –5 657 –6 921 

Profit (loss) for the period 55 160 67 368 48 519 34 612 –50 191 

Attributable to shareholders of Saurer Ltd. 53 392 66 774 47 200 33 466 –51 314 

EBITDA (operating profit before depreciation and amortization) 

Total continuing operations 152 207 165 372 152 026 141 288 94 484 

of which Saurer Textile Solutions 97 077 115 142 99 405 79 115 40 962 


Depreciation and amortization 


as % of sales 4.1% 4.6% 4.1% 4.3% 4.8% 



Orders – continuing operations 

Order intake 1 463 793 1 689 834 1 595 644 1 682 053 1 328 729 

Orders on hand 392 008 459 613 391 393 451 315 368 430 

Cash flow 

Cash flow from operating activities 71 464 163 174 125 025 144 999 116 590 

as % of sales 4.6% 10.2% 7.6% 9.1% 7.9% 

Capital expenditure – continuing operations 78 301 59 126 47 233 48 491 58 871 



1) The year 2004 has been restated to take account of IFRS 2 (Share-based Payment). 

2) The years 2001 to 2004 have been restated to show discontinued operations separately in the income statement. 

Multiple year comparison Saurer 2005

MULTIPLE YEAR COMPARISON PAGE 75 

Balance sheet (EUR 000) 31.12.2005 31.12.2004 1) 31.12.2003 31.12.2002 31.12.2001 

Assets 

Liquid assets 165 888 265 679 109 786 100 687 133 998 

Accounts receivable, trade 251 345 226 685 276 170 281 409 261 315 

Inventories 231 920 233 436 207 211 218 969 244 498 

Prepayments, other receivables 62 021 93 932 77 893 69 672 54 805 

Current assets 711 174 819 732 671 060 670 737 694 616 

Financial assets, deferred taxes 48 847 53 762 65 037 71 311 75 321 

Property, plant and equipment 375 874 325 211 395 228 430 409 478 411 

Intangible assets 129 184 102 196 119 654 128 643 138 040 

Non-current assets 553 905 481 169 579 919 630 363 691 772 

Total assets 1 265 079 1 300 901 1 250 979 1 301 100 1 386 388 


Short-term debt 29 066 92 638 16 793 44 728 149 390 

Accounts payable, trade 167 387 196 003 159 124 165 025 165 877 

Provisions, accruals and deferred income 141 633 160 668 168 436 175 874 166 328 

Other current liabilities 118 861 92 872 89 835 98 504 64 291 

Current liabilities 456 947 542 181 434 188 484 131 545 886 

Long-term debt 25 060 31 556 125 370 161 746 192 605 

Provisions, deferred taxes, other non-current liabilities 208 096 210 439 220 830 222 183 221 996 

Non-current liabilities 233 156 241 995 346 200 383 929 414 601 

Total liabilities 690 103 784 176 780 388 868 060 960 487 

Minority interests 11 494 2 938 2 720 2 445 11 064 

Shareholders‘ equity attributable 

to shareholders of Saurer Ltd. 563 482 513 787 467 871 430 595 414 837 

Total shareholders‘ equity 574 976 516 725 470 591 433 040 425 901 

Total liabilities and shareholders‘ equity 1 265 079 1 300 901 1 250 979 1 301 100 1 386 388 

Equity financing ratio 45.5% 39.7% 37.6% 33.3% 30.7% 


Employees (full-time equivalents) – continuing operations 1) 

Number of employees (year-end) 10 021 8 852 9 415 9 974 10 663 



Europe 7 483 7 278 7 936 8 717 9 536 

of which Switzerland 336 237 269 256 288 

NAFTA 233 226 251 289 323 

Asia 2 221 1 313 1 160 906 742 

Rest of world 84 35 68 62 62 

Personnel expenses (EUR 000) – continuing operations 2005 2004 2003 2002 2001 

Wages and salaries 294 094 317 583 350 596 369 628 373 911 

Social security and other personnel expenses 93 994 97 597 97 946 98 171 101 563 

Total 388 088 415 180 448 542 467 799 475 474 

1) 2005: including 1369 from acquisitions made in 2005. 


PAGE 76 


Income Statement (CHF 000) 2005 2004 1)2) 2003 2) 2002 2) 2001 2) 

Sales 

Saurer Textile Solutions 1 816 010 1 867 692 1 939 201 1 777 422 1 796 460 


Total sales 2 431 017 2 460 224 2 491 156 2 335 173 2 222 705 

Gross profit 488 173 526 653 556 506 541 994 498 804 

Operating expenses before impairment charge –351 446 –384 194 –427 560 – 434 369 –463 732 

Operating profit before impairment charge 136 727 142 459 128 946 107 625 35 072 

Impairment charge – – – – –76 786 

Operating profit (loss) 136 727 142 459 128 946 107 625 –41 714 

of which Saurer Textile Solutions 97 331 117 408 94 586 54 598 –87 860 


Financial expense (net) –15 118 –25 637 –25 669 –19 643 –20 655 

Profit (loss) before income taxes 121 609 116 822 103 277 87 982 –62 369 

Income taxes –36 187 –40 909 –33 450 –28 903 –2 988 

Profit (loss) from continuing operations 85 422 75 913 69 827 59 079 – 65 357 

Result from discontinued operations – 28 123 3 946 – 8 299 – 10 453 

Profit (loss) for the period 85 422 104 036 73 773 50 780 – 75 810 

Attributable to shareholders of Saurer Ltd. 82 684 103 119 71 767 49 098 –77 506 

EBITDA (operating profit before depreciation and amortization) 




Depreciation and amortization 


as % of sales 4.1% 4.6% 4.1% 4.3% 4.8% 



Orders – continuing operations 

Order intake 2 266 874 2 609 611 2 426 177 2 467 740 2 006 912 

Orders on hand 609 612 710 102 609 751 656 483 546 087 

Cash flow 

Cash flow from operating activities 110 671 251 990 190 101 212 728 176 097 

as % of sales 4.6% 10.2% 7.6% 9.1% 7.9% 

Capital expenditure – continuing operations 121 259 91 308 71 818 71 141 88 919 




2) The years 2001 to 2004 have been restated to show discontinued operations separately in the income statement. 


MULTIPLE YEAR COMPARISON PAGE 77 

Balance sheet (CHF 000) 31.12.2005 31.12.2004 1) 31.12.2003 31.12.2002 31.12.2001 

Assets 

Liquid assets 257 972 410 474 171 036 146 459 198 613 

Accounts receivable, trade 390 867 350 228 430 245 409 338 387 323 

Inventories 360 659 360 659 322 814 318 512 362 396 

Prepayments, other receivables 96 449 145 125 121 350 101 346 81 232 

Current assets 1 105 947 1 266 486 1 045 445 975 655 1 029 564 

Financial assets, deferred taxes 75 962 83 062 101 321 103 730 111 641 

Property, plant and equipment 584 522 502 451 615 726 626 073 709 103 

Intangible assets 200 894 157 893 186 409 187 125 204 603 

Non-current assets 861 378 743 406 903 456 916 928 1 025 347 

Total assets 1 967 325 2 009 892 1 948 901 1 892 583 2 054 911 


Short-term debt 45 201 143 126 26 162 65 062 221 427 

Accounts payable, trade 260 304 302 825 247 899 240 292 245 864 

Provisions, accruals and deferred income 220 253 248 232 262 406 269 319 246 532 

Other current liabilities 184 841 143 487 139 954 129 545 95 292 

Current liabilities 710 599 837 670 676 421 704 218 809 115 

Long-term debt 38 971 48 754 195 314 235 274 285 481 

Provisions, deferred taxes, other non-current liabilities 323 610 325 128 344 031 323 187 329 044 

Non-current liabilities 362 581 373 882 539 345 558 461 614 525 

Total liabilities 1 073 180 1 211 552 1 215 766 1 262 679 1 423 640 

Minority interests 17 874 4 539 4 237 3 556 16 399 

Shareholders‘ equity attributable 

to shareholders of Saurer Ltd. 876 271 793 801 728 898 626 348 614 872 

Total shareholders‘ equity 894 145 798 340 733 135 629 904 631 271 

Total liabilities and shareholders‘ equity 1 967 325 2 009 892 1 948 901 1 892 583 2 054 911 

Equity financing ratio 45.5% 39.7% 37.6% 33.3% 30.7% 


Employees (full-time equivalents) – continuing operations 1) 

Number of employees (year-end) 10 021 8 852 9 415 9 974 10 663 



Europe 7 483 7 278 7 936 8 717 9 536 

of which Switzerland 336 237 269 256 288 

NAFTA 233 226 251 289 323 

Asia 2 221 1 313 1 160 906 742 

Rest of world 84 35 68 62 62 

Personnel expenses (CHF 000) – continuing operations 2005 2004 2003 2002 2001 

Wages and salaries 189 906 205 649 230 579 251 945 247 558 

Social security and other personnel expenses 60 695 63 198 64 417 66 915 67 242 

Total 250 601 268 847 294 996 318 860 314 800 

1) 2005: including 1369 from acquisitions made in 2005. 


FINANCIAL REPORT OF SAURER LTD.

SEITE 80 

SAURER LTD. – INCOME STATEMENT for the years ended December 31, 

Revenues (CHF) Note* 2005 2004 

Revenues from investments 1 163 650 900 32 097 225 

Interest income 4 249 792 4 769 544 

Other income 2 1 393 023 7 811 490 

Total revenues 169 293 715 44 678 259 

Expenses 

Administration expense –2 936 725 –2 836 082 

Finance expense (including value adjustments) –552 264 –1 132 978 

Interest expense –5 378 864 –3 347 948 

Taxes –146 139 –143 764 

Other expenses 3 –126 150 276 –631 823 

Total expenses –135 164 268 –8 092 595 

Net income 34 129 447 36 585 664 

* For details see notes to the financial statements, page 82–83. 

Financial statements Saurer Ltd. 2005

SAURER LTD. – BALANCE SHEET as at December 31, PAGE 81 

Assets (CHF) Note* 31.12.2005 31.12.2004 

Cash 4 7 146 658 2 199 121 

Marketable securities 5 5 515 68 793 213 

Current accounts receivable 

Third parties 116 371 1 739 344 

Group companies 182 538 1 237 611 

Accrued income 387 767 545 884 

Current assets 7 838 849 74 515 173 

Loans 

Third parties 99 962 155 902 

Group companies 1 249 985 227 148 900 680 

Investments 3, 6 589 309 797 670 041 232 

Non-current assets 839 394 986 819 097 814 

Total assets 847 233 835 893 612 987 

Liabilities 

Short-term debt 

Third parties 4 7 784 254 1 776 764 

2 1 /4% convertible bond 2000–2005 7 – 129 655 000 

Group companies 3 653 933 1 567 246 

Short-term provisions 130 273 2 921 

Accruals and deferred income 1 121 849 2 000 733 

Current liabilities 12 690 309 135 002 664 

Long-term debt 

Group companies 8 233 611 329 93 921 033 

Long-term provisions 50 324 030 50 324 030 

Non-current liabilities 283 935 359 144 245 063 

Total liabilities 296 625 668 279 247 727 

Share capital 138 206 000 177 445 000 

General legal reserves 61 904 473 61 904 473 

Reserve for treasury shares 8 600 000 92 490 000 

Unappropriated retained earnings 341 897 694 282 525 787 

Shareholders’ equity 9 550 608 167 614 365 260 

Total liabilities and shareholders’ equity 847 233 835 893 612 987 

* For details see notes to the financial statements, page 82–83. 


PAGE 82 

Explanation to the financial statements 

Saurer shareholders participate legally in Saurer Ltd., which controls the companies listed on pages 71. The consolidated financial statements are of 

primary importance economically. The statutory financial statements of Saurer Ltd. are in this context to be viewed as a supplement. 

Notes (CHF) 

1 Revenues from investments 

SAC Saurer Automotive Components BV, Rotterdam, has declared a dividend distribution in the amount of CHF 125 963 100. This dividend distribu- 

tion was converted into a non-interest bearing loan, payable on December 31, 2009, at the latest. 

2 Other income 

Other income mainly consists of recharges to Saurer subsidiary companies related to bank guarantees granted to them. In the previous year, a profit 

of CHF 5 870 000 generated from the internal sale of an investment was included in this position. 

3 Other expenses 

Due to the dividend declared by SAC Saurer Automotive Components BV (see note 1) the investment in Saurer Automotive Components BV was 

written down by the same amount. 

4 Cash 

A portion of the purchase price for the majority shareholding in Jinsheng (China) in the amount of CHF 6 046 278 has been deposited in an escrow 

account. 

5 Marketable securities 

The cancelling of previously bought treasury shares based on capital redemption, which was approved by Saurer shareholders at the general assembly 

held on May 12th, 2005, was realized during 2005. A total of 882 000 Saurer treasury shares with an average price of CHF 77.99 per share were 

cancelled. 

6 Investments 

See page 71. 

7 2 1 /4% Convertible bond 2000–2005 

The 2 1 /4% convertible bond was fully repaid on June 27, 2005. 

8 Long-term debt 

SAURER LTD. – NOTES TO THE FINANCIAL STATEMENTS 

The significant increase in long-term debt with Group companies is due to repayment of the 2 1 /4% convertible bond, a capital redemption of 

CHF 29 096 000 as well as the purchase of majority shareholding in Jinsheng (China). 


9 Development of shareholders’ equity 

SAURER LTD. – NOTES TO THE FINANCIAL STATEMENTS PAGE 83 

General Reserve for Unappropriated 

Share capital reserves treasury shares retained earnings Total 

Balance as at 01.01.2004 177 445 000 61 904 473 101 130 000 237 300 123 577 779 596 

Net income for the year 2004 36 585 664 36 585 664 

Transfer from reserve for treasury shares –8 640 000 8 640 000 – 

Balance as at 31.12.2004 177 445 000 61 904 473 92 490 000 282 525 787 614 365 260 

Net income for the year 2005 34 129 447 34 129 447 

Capital repayment –29 096 000 –29 096 000 

Cancelling of treasury shares –10 143 000 –58 647 540 –68 790 540 

Transfer from reserve for treasury shares –25 242 460 25 242 460 – 

Balance as at 31.12.2005 138 206 000 61 904 473 8 600 000 341 897 694 550 608 167 

10 Authorized and conditional capital 

See Note 16 on page 65. 

11 Contingent liabilities 31.12.2005 31.12.2004 

Guarantees 491 145 000 459 662 000 

The guarantees are given in favor of Saurer subsidiary companies. 

12 Treasury shares 

Treasury shares are held by Saurer Ltd. and a subsidiary company. Details of treasury shares (including purchases and sales) are shown in Note 16 on 

page 65. 

13 Significant shareholders 

See Section 1.2 on page 86 of the Corporate Governance Report. 


PAGE 84 

Appropriation of retained earnings (CHF) 

Retained earnings brought forward 282 525 787 

Net income for the financial year 2005 34 129 447 

Transfer from reserve for treasury shares 25 242 460 

Unappropriated retained earnings 341 897 694 

The Board of Directors proposes to the General Meeting of Shareholders that the unappropriated retained earnings be carried forward to new 

account. 

SAURER LTD. – PROPOSAL TO THE GENERAL MEETING OF SHAREHOLDERS 

Instead of a dividend, the Board of Directors proposes a capital repayment of CHF 1.80 per registered share. 


Report of the statutory auditors 

to the general meeting of Saurer Ltd., Arbon 

SAURER LTD. – REPORT OF THE STATUTORY AUDITORS PAGE 85 

As statutory auditors, we have audited the accounting records and the financial statements (income statement, balance sheet and notes on pages 80 

to 84) of Saurer Ltd. for the year ended December 31, 2005. 

These financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion on these financial statement 

based on our audit. We confirm that we meet the legal requirements concerning professional qualification and independence. 

Our audit was conducted in accordance with Swiss Auditing Standards, which require that an audit be planned and performed to obtain reasonable 

assurance about whether the financial statements are free from material misstatement. We have examined on a test basis evidence supporting the 

amounts and disclosures in the financial statements. We have also assessed the accounting principles used, significant estimates made and the over- 

all financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. 

In our opinion, the accounting records and financial statements and the proposed appropriation of available earnings comply with Swiss law and the 

company’s articles of incorporation. 

We recommend that the financial statements submitted to you be approved. 

PricewaterhouseCoopers AG 

Daniel Ketterer Beat Inauen 

St. Gallen, March 1, 2006 

Report of the statutory auditors Saurer Ltd. 2005

PAGE 86 

Corporate Governance 

CORPORATE GOVERNANCE 


1. GROUP STRUCTURE 

AND SHAREHOLDERS 

1.1 Group structure. Saurer Ltd. is a corporation organized under the laws of Switzerland 

with legal domicile in Arbon. The activities of the group are divided into two main operating 

divisions: Saurer Textile Solutions and Transmission Systems. 

All major companies of Saurer are set out in the list of principal companies and investments 

on page 71. 

Saurer registered shares (SAUN) are listed on the SWX Swiss Stock Exchange in Zurich (ISIN: 

CH0012345143). The market capitalization at year-end was EUR 812m (CHF 1 262m). 

1.2 Significant shareholders. At the end of 2005 the following shareholders were registered: 

Shareholders Number of shares Number of shareholders 

Individuals 9.25% 87.88% 

Corporate entities 28.15% 12.12% 

Treasury shares 0.82% – 

Shares in the process of transfer 61.78% – 

According to information available to the company, the following shareholders reported 

shareholdings above 5% of share capital and voting rights at December 31, 2005: 

Laxey Partners Ltd (Group) between 10% and 20% (reported on August 17, 2005: 15.02%), 

Zürcher Kantonalbank between 5% and 10% (reported on August 10, 2005: 5.86%) 

1.3 Cross-shareholdings. There are no cross-shareholdings of Saurer with another company 

or group of companies. 

2. CAPITAL STRUCTURE 

2.1 Capital. The issued share capital of Saurer Ltd. is CHF 138 206 000, comprising 14 548 000 

fully paid registered shares with a nominal value of CHF 9.50 each. 

2.2 Authorized and conditional capital. Details of the authorized and conditional capital are 

set out in note 16 on page 65. 

2.3 Changes of capital. Information on movements in the capital structure for 2005 and 

2004 are set out in the consolidated statement of shareholders’ equity on page 48. 

The movements for the year 2003 are set out in the consolidated statement of shareholders’ 

equity on page 40 of the Annual Report 2004, which is available on the group’s homepage, 

www.saurer.com. 

100.00% 100.00%

GROUP STRUCTURE 

Corporate 

Communications 

S. Lalive d’Epinay 


H. Fischer* 

H. J. Jaussi, S. Kross, J. Röttgering, C. U. Mai 

Spinning Systems 

M. Stillger 

Neumag 

Dr. C. Voigtländer 

Winding Systems 

G. Küsters 

Twisting Systems 

Dr. D. Burger 

Components 

J. Steiger* 

Finance, Controlling, 

CFO 

P. Stiefenhofer* 

Texturing Systems 

K. Karrasch 

Rotor Spinning Systems 

J. Cundill 

Ring Spinning Systems 

H. Kamp 

Embroidery Systems 

Dr. J. Henz 

Saurer Ltd. 

Board of Directors 

CEO and Delegated Member of the Board of Directors 

H. Fischer* 

CORPORATE GOVERNANCE PAGE 87 

2.4 Shares and participation certificates. Each registered share is entitled to one vote at the General 

Meeting of Shareholders. Voting rights may only be exercised after the shareholder has been registered 

in the share register. All shares are entitled to full dividend rights. The voting rights of treasury shares held 

by the company or its subsidiaries are suspended. In the event of a capital increase through the issue of 

new shares, the existing shareholders have subscription rights in proportion to their existing shareholding, 

unless the General Meeting of Shareholders restricts or excludes such rights for important reasons, especially 

in connection with the acquisition of investments or employee participation. 

Saurer Ltd. has not issued (non-voting) participation certificates. 

Business 

Development 

C. Ruckstuhl 

2.5 Bonus certificates. Saurer Ltd. has not issued bonus certificates. 


Dr. M. Lamberto* 

G. Lehman**, G. Sarti, A. Prono, S. Puglisi 

Off-Highway 

M. Cettolin 

Automotive 

P. Mantelli 

Internal Audit 

H. Beumer 

Market 

Development 

J. Steiger* 

Fairfield** 

G. Lehman 

Gears & Components 

S. Piazza 

Jingsheng 

Pan Xue Ping * Member of Senior Management 

** Fairfield as from Jan. 28, 2006 

2.6 Limitations on transferability and nominee registrations. There are no restrictions for Swiss or for 

non-Swiss investors with regard to registration in the share register, insofar as they have acquired the 

shares for their own account. Nominees will be registered only if they disclose the identity of the beneficial 

owners. There are no limits regarding the number of shares eligible for voting rights to be registered. 

However, in accordance with the articles of incorporation and by the law, there is an obligation to report 

participations which exceed or fall below 5, 10, 20, 25, 33 1 /3, 50 and 66 2 /3 percent, respectively. In the 

event that a participation of 33 1 /3 percent is attained, the holder of this participation is obliged to 

submit a public tender offer (according to the articles of incorporation of the company as well as the 

Swiss Federal Act on Stock Exchanges and Securities Trading – SESTA – of 1995, Articles 20 and 32). 

Registered shares not physically in existence, including the rights associated therewith, may only be trans- 

Corporate Governance

PAGE 88 



ferred by assignment. Saurer Ltd. must be notified for assignments to be valid. If registered shares not 

physically in existence are managed by a bank on the instruction of a shareholder, such registered shares 

may only be transferred with the cooperation of the bank. 

2.7 Convertible bonds and options. Details of the repaid convertible bond are set out in note 13 on 

page 62, and details of stock options are set out in note 19 on page 67 and 68. 

3. BOARD OF DIRECTORS 

3.1 Members. The articles of incorporation stipulate that the Board of Directors consist of a minimum of 

three and a maximum of nine members. At present, the Board of Directors is composed as follows: 

Name Nationality Position Date of first appointment 

Prof. Dr. Giorgio Behr Swiss Chairman, non-executive June 6, 1995 

Ulrich Schmidt German Deputy chairman, non-executive May 16, 2000 

Heinrich Fischer Swiss Delegated member, executive member May 18, 1998 

Heinz Bachmann Swiss Non-executive member May 14, 2003 

Alexis Fries Swiss Non-executive member May 16, 2002 

Hans-Georg Härter German Non-executive member May 16, 2002 

Prof. Dr. Günther Schuh German Non-executive member May 16, 2002 

3.2 Education, professional background, other activities and functions. None of the non-executive 

Members of the Board was a member of Saurer’s management in the three financial years preceding the 

current year, except for Heinz Bachmann. None of the non-executive Members of the Board has impor- 

tant business connections with Saurer, except as noted in 5.1 below (consulting). None of the Members 

of the Board exercises official functions or holds political posts. 

Prof. Dr. Giorgio Behr (1948) 

Education: Law School University of Zurich, Swiss Certified Public Accountant, Attorney, Visiting Scholar 

University of Washington. 

Professional background: After ten years with KPMG, he joined the industrial group Hesta. From 1984 on 

he built up the consulting company Behr Deflandre & Snozzi BDS (sold end of 2004). From 1991 takeover 

of various companies (Bircher, Reglomat, Cellpack and Celltec), since 2003 grouped together into Behr 

Bircher Cellpack BBC Group. 

Activities in governing and supervisory bodies: Professor at the University of St. Gallen Business School 

(HSG) until spring 2005, now honorary professor. Member of the Board of the Hilti Group, Liechtenstein. 

Chairman of the board of trustees of the commission Swiss GAAP FER. Since fall 2005 (until September 

2007) Chairman of the professional body of certified accountants and tax consultants of the Swiss Insti- 

tute of Certified Accountants and Tax Consultants. Chairman of the board of trustees of various non-pro- 

fit organizations in the field of sport and oldtimer railways. 

Permanent management and consultancy functions for Swiss and foreign interest groups: None. 

Special Board assignments: Chairman. 

Ulrich Schmidt (1940) 

Education: Degree in Engineering, Technical University of Hannover. 

Professional background: Head of Development, Imperial-Werke Bünde (1967 to 1972). Head of Devel- 

opment, AEG, Nuremberg (1972 to 1980). Head of Production, Cooling and Freezing, AEG, Nuremberg 

(1981 to 1986). Head of Drilling Division, Hilti AG, Schaan (1986 to 1993). Member of the Executive 

Board, Hilti AG, Schaan (1994 to 1999). Since 2000 consultant.


Activities in governing and supervisory bodies: Member of the Board of Plaston AG, Widnau, and Hilcona 

AG, Liechtenstein. 


Special Board assignments: Deputy Chairman. Member of the Audit Committee. 

Heinrich Fischer (1950) 

Education: Master of Applied Physics & Electrical Engineering, ETH Zurich, MBA, University of Zurich. 

Professional background: Four years R&D in electronics after obtaining Master’s degree. From 1980 to 

1990 Balzers Division of Unaxis Group: Director of Staff, Technology, and Vice President, Business Unit 

Coating Equipment. From 1991 to 1996 Unaxis (formerly Oerlikon Bührle Holding AG): Executive Vice 

President, Corporate Development. 

Activities in governing and supervisory bodies: Member of the Board of Schweiter Technologies AG. 


Special Board assignments: Delegated Member and Chief Executive Officer, Saurer (since April 1, 1996). 

Heinz Bachmann (1942) 

Education: Degree in Engineering, Technical University for Textile Industry, Reutlingen. 

Professional background: Member of Group Management and Technical Manager, Wellington Industries 

Ltd, South Africa (1967 to 1974). Managing Director, responsible for R&D and production, Lauffenmühle 

Group, Tiengen (1975 to 1980). Chief Representative of Schubert & Salzer Ltd, Ingolstadt. Director and 

Member of Group Management of Rieter Ltd, Winterthur (1981 to 1989). CEO, Saurer Textile Systems 

(1990 to April 30, 2003). 

Activities in governing and supervisory bodies: Member of the Board of Burckhardt Compression AG, 

Hunziker AG, Graf & Cie. AG (until October 31, 2005). Chairman Santex Group. Guest Professor, Donghua 

University, Shanghai. Academic Consultant of College of Textile Development Committee, Donghua Uni- 

versity, Shanghai. 

Permanent management and consultancy functions for Swiss and foreign interest groups: Chairman 

Swissmem. Until June 2004, Chairman Swissmem Textile Machinery Group. Swissmem. Board Member of 

CEMATEX (European Committee of Textile Machinery Manufacturers). Honorary Treasurer JTMF. Chair- 

man, Swiss Turkish Business Council. 

Alexis Fries (1955) 

Education: Degree in Physics, ETH Zurich. 

Professional background: From 1980 various positions with ABB (formerly BBC Brown Boveri) in Switzer- 

land, Philippines, Japan and Hong Kong. Executive Vice President, ABB Zurich, and Member of the Group 

Executive Committee of ABB (1993 to 1998), Head of Power Generation Division (1998 to 1999). Executive 

Vice President, ABB ALSTOM Power, Brussels, Manager of Gas Turbines Division (1999 to 2001). From 

2001 to 2003 President, ALSTOM Power, Paris, Member of the Group Management of ALSTOM. Since 

2004 Business Consultant. 

Activities in governing and supervisory bodies: none. 


Hans-Georg Härter (1945) 

Education: Training in Mechanical Engineering, State Technician’s Certificate in machine design, construc- 

tion and assembly at the Technicians’ Day School, Berlin, degree in Engineering from the Meersburg 

Academy. 

Professional background: From 1973 various management functions within the ZF Group. Member of 

Board of Management, ZF Group. From 2002 Chief Executive Officer, ZF Sachs AG, Schweinfurt. 

Activities in governing and supervisory bodies: Chief Executive Officer, ZF Sachs AG, Schweinfurt. 

Permanent management and consultancy functions for Swiss and foreign interest groups: none. 


PAGE 90 



Prof. Dr. Günther Schuh (1958) 

Education: Dr.-Ing., Dipl.-Wirt. Ing., RWTH Aachen University. Postdoctoral lectureship qualification, 

University of St. Gallen Business School. 

Professional background: Lectureships and professorships at University of St. Gallen. From 2002 fully ten- 

ured Professor for Production Engineering, RWTH Aachen University. Member of the Board of Directors of 

the Laboratory for Machine Tools and Production Engineering (WZL) of RWTH Aachen University and 

Member of the Board of Directors of the Fraunhofer IPT Aachen and of Research Institute for Rationaliza- 

tion (FIR) e.V. of RWTH Aachen University, and permanent Guest Professor at the University of St. Gallen 

(HSG). 

Activities in governing and supervisory bodies: Member of the Board of Gallus Holding AG, St. Gallen, 

Deputy Chairman of Zwiesel Kristallglas AG, Zwiesel, Member of the Supervisory Board of ThyssenKrupp 

Xervon GmbH, Gelsenkirchen. Chairman of the Board of Virtuelle Fabrik AG, St. Gallen, and GPS AG, 

St. Gallen. Chairman of the Supervisory Board of WZL forum GmbH. 

Permanent management and consultancy functions for Swiss and foreign interest groups: none. 

Special Board assignments: Chairman of the Audit Committee. 

3.3 Cross-involvement. As mentioned above under 3.2 there is the following cross-involvement with the 

Boards of Directors of other listed companies: Schweiter Technologies AG (Heinrich Fischer). 

3.4 Elections and terms of office. The Members of the Board of Directors are generally elected for the 

period of one year, which is defined as the period between one Annual General Meeting of the Share- 

holders and the following Annual General Meeting. Members may continue to be re-elected until they 

reach the age of 70. 

3.5 Internal organizational structure. The Board of Directors of Saurer Ltd. (the “company”) has 

adopted written Internal Regulations for the management of the company and of its subsidiaries 

pursuant to article 716b of the Swiss Code of Obligations (Company Law), the rules of the SWX Swiss 

Exchange and the company’s Articles of Association. 

3.5.1 Allocation of tasks within the Board of Directors. The Board elects a Chairman and a Deputy 

Chairman. Until such election or in the absence of the Chairman and Deputy Chairman, the longest 

serving Director presides over the Board. The Chairman of the Board is also Chairman of the “Committee 

of the Board” if this is appointed (see 3.5.2). The Board also elects the Chairman of the Audit Committee. 

He must not be Chairman of the Board at the same time. The Head of Internal Audit and Risk Manage- 

ment reports to him. The Delegated Member of the Board is at the same time CEO of the company. The 

Board elects a Secretary to the Board and the company who need not be a Board Member. At present this 

function is assigned to the CFO. 

3.5.2 Committees. 

Audit Committee. The Members of the Audit Committee are: 

• Prof. Dr. Günther Schuh, Chairman 

• Ulrich Schmidt, Member 

• Günther Schultz, Member (until the Annual Meeting of Shareholders 2006) 

Günther Schultz, external consultant, who is not a Member of the Board of Directors, but has a contrac- 

tual consulting relationship. Mr. Schultz, Swiss Certified Public Accountant, is a retired partner of KPMG, 

Zurich. He was previously Head of Auditing Services of KPMG Switzerland and Chairman of the Swiss 

Institute of Certified Public Accountants. 

The Audit Committee advises and supports the Board in all matters related to external audit, internal 

audit, risk management, accounting policies and practices and compliance with adopted accounting 

standards.


Committee of the Board. A Committee of the Board, consisting of three members, can be appointed if 

the Board has seven or more members and if the Board so decides. The Board can delegate certain func- 

tions to this committee. While the Committee of the Board is defined in the Internal Regulations, in the 

past it has never been appointed. 

Other Committees. Given the small size of the Board, important matters such as nomination, compensa- 

tion and management development are discussed by the full Board of Directors. If fast and decisive action 

is required, the Board has on rare occasions in the past appointed ad hoc committees for certain limited 

tasks. For several months at the end of 2001 and early 2002 the Board established a committee to review 

restructuring projects. 

3.5.3 Work methods of the Board. The Board meets as often as the business requires, but no fewer than 

four times per fiscal year. Board meetings last from one to two days. In 2005, the Board met five times 

(for seven days in total). 

A quorum of a majority of the Directors is required for resolutions to be valid. Resolutions are adopted by 

simple majority, with the Chairman casting the decisive vote in case of a tie. 

The Audit Committee normally meets three times a year, but not less than twice. Meetings last a half or 

a full day. In 2005, the Audit Committee met three times. The Chairman of the Audit Committee reports 

about issues and decisions to the full Board at the next Board meeting. 

The CEO as Delegated Member attends Board meetings, as does the CFO who has been elected as 

Secretary. 

Heads of strategic business units and business unit managers are regularly invited to present their budgets 

and strategic plans to the full Board. 

3.6 Definition of areas of responsibility. While the Board of Directors has delegated the executive 

management of the company and the group to the CEO and to the Senior Management, the following 

responsibilities remain with the Board: 

• Define the ultimate direction and strategy of the group. 

• Determine the top-level organizational structure of the group. 

• Approve the yearly budgets and annual reports, reporting and accounting policies. 

• Based on recommendations of the Audit Committee and the work of Internal Audit, ensure that 

internal control systems of the group are adequate. 

• Determine the appropriate capital structure. 

• Appoint and remove members of the Senior Management, assess the next lower level of Senior 

Man-agement. Discuss on an annual basis as part of a strategic management development process 

(SMD) the reviews of upper management levels. The focus is on key management positions of Saurer 

and its business units. 

• Elect the Chairman and Deputy Chairman as well as the Chairman of the Audit Committee. 

• Decide about the establishment of Committees of the Board (see 3.5.2). 

• Decide about subsidiaries, investments, acquisitions, financial market transactions, financing, assuming 

liabilities and granting of guarantees if they exceed certain limits that have been delegated to the 

CEO. While the limit for raising external financing on an aggregate basis below CHF 50m has been 

delegated to the CEO, all other limits of delegation to the CEO are CHF 15m or lower. 

3.7 Information and control instruments. Saurer’s reporting system uses professional reporting and 

consolidation software. Income statements and full balance sheets are reported and consolidated on a 

monthly basis, including other information pertinent to an up-to-date controlling system, such as sales 

and margin details, headcount, cash flow and capital spending. Specific treasury information is reported 

on a weekly and monthly basis. While a yearly budget is established and approved in the period of October 


PAGE 92 



to December of the prior year, updated year-end projections are reported several times a year. Business 

unit managers report trends and developments in business, revenues, costs and other relevant informa- 

tion on a monthly basis. 

The Saurer reporting system supports value management with a view to compensation programs (see 

Section 5). For all business units operating profit and net operating assets are reported, which allows the 

determination of asset turns and return on operating assets. 

In cases of specific initiatives, such as significant restructuring, the Board in the past has received special 

ad-hoc reporting. 

The Internal Audit function provides the Board of Directors with independent and objective assessments 

of the effectiveness of the internal control and risk management systems. The COSO framework is used 

for reviewing management’s risk management and internal control practices. In September, the Audit 

Committee approves the budget, resources and internal audit plan for the next year. The selection of In- 

ternal Audit projects is based on risk assessment, with a focus on operational processes, throughout the 

Saurer group. The results of Internal Audits are communicated to management in charge, to Group 

Management, to the Audit Committee, to the Chairman of the Board as well as to External Audit through 

formal Internal Audit reports. Regular follow-up is performed to ensure that risk mitigation and control 

improvement measures are implemented on a timely basis. 

The Head of Internal Audit and Risk Management, Hans Beumer, reports directly to the Audit Committee 

of the Board of Directors, to ensure independence from management. Mr. Beumer studied Business Ad- 

ministration (drs) at the Free University in Amsterdam and is a Dutch Certified Public Accountant (RA), 

Certified Internal Auditor (CIA) and Certified Information Systems Auditor (CISA). He trained in the public 

accounting practice with Arthur Andersen (Amsterdam and Zurich). He previously worked in Internal 

Audit and Finance Management at Boehringer Mannheim Group, Amsterdam, was Head of Internal 

Audit and Head of Group Reporting at adidas-Salomon, Herzogenaurach, and latterly CFO of Dutch 

Broadcasting Services, Hilversum.

4. SENIOR MANAGEMENT 

4.1 Members 


Name Nationality Function 

Heinrich Fischer Swiss CEO Saurer, Delegated Member of the Board of Directors, 

4.2 Education, professional background, other activities and functions. None of the members of the 

Senior Management is a member of governing and supervisory bodies of important Swiss or foreign or- 

ganizations outside of Saurer, with the exception of Heinrich Fischer, as noted in 3.2 above. None of the 

members holds permanent management or consultancy functions for important Swiss or foreign interest 

groups, and none of the members has official functions or holds political posts. 


See 3.2 above. 

Peter Stiefenhofer (1953) 

Education: Degree in Economics and Business Administration, University of Zurich. Swiss Certified Public 

Accountant. Advanced Executive Course (Northwestern University, Kellogg). 

Professional background: Auditor and systems consultant with KPMG. Group Controller, Zellweger Group. 

Vice President Finance and Operations, Zellweger Analytics, Inc., U.S. 

Tasks previously carried out for Saurer: none. 

Dr. Marcello Lamberto (1951) 

Education: Doctor in Mechanical Engineering from Politecnico di Torino. 

Professional background: Metallurgist within the Product Development Department at Fiat Cars. Chief 

Metallurgist and Quality Manager at Rockwell CVC (joint venture between Rockwell International and 

Iveco, manufacturing axles for trucks). From October 1984 various positions at Graziano Trasmissioni 

(Quality Manager, Operations Manager, assistant to the Managing Director, General Manager and CEO). 

Tasks previously carried out for Saurer: none. 

Josef Steiger (1951) 

Education: Degree in Engineering, ETH Zurich. Degree in Business Administration from HSG (University of 

St. Gallen Business School). 

Professional background: Relationship Manager for Corporate Finance for Swiss multinational companies 

at Chase Manhattan Bank, Zurich. Managing Director of Multivac Export AG, Baar. Head of Sales at Rieter 

Ltd., Winterthur. 

CEO Saurer Textile Solutions 

Peter Stiefenhofer Swiss CFO Saurer 

Dr. Marcello Lamberto Italian CEO Transmission Systems 

Josef Steiger Swiss Head Market Development and CEO Components 

Tasks previously carried out for Saurer: General Manager, TEXParts GmbH, until December 31, 2003. 

4.3 Management contracts. Saurer does not have management contracts with third parties. 


PAGE 94 



BOARD OF DIRECTORS 

Heinz Bachmann 

Alexis Fries 

Prof. Dr. Giorgio Behr 

Hans-Georg Härter 


Ulrich Schmidt Prof. Dr. Günther Schuh

TOP MANAGEMENT 

Dr. Dirk Burger 

CEO Twisting Systems 

Heinz Kamp 

CEO Ring Spinning Systems 

Dr. Marcello Lamberto 

CEO Graziano Trasmissioni 

Josef Steiger 

Market Development 

John Cundill 

CEO Rotor Spinning Systems 

Klaus Karrasch 

CEO Texturing Systems 

Claus-Ulrich Mai 

CFO Saurer Textile Solutions 

Peter Stiefenhofer 

Chief Financial Officer 

Dr. Jürg Henz 

CEO Embroidery Systems 

Stefan Kross 

Chief Technology Officer 

Jan-Markus Röttgering 

Chief Commercial Officer 

Martin Stillger 

CEO Spinning Systems 


Hansjörg Jaussi 

Human Resources 

Gerard Küsters 

CEO Winding Systems 

Gianni Sarti 

Managing Director 

Graziano Trasmissioni 

Dr. Carsten Voigtländer 

CEO Neumag 


PAGE 96 



5. COMPENSATION, SHAREHOLDINGS 

AND LOANS 

5.1 Content and method of compensation 

Non-Executive Directors 

For the Board of Directors, the following forms of compensation apply: 

• Board fees (cash) 

• Long-term bonus* 

• Other cash compensations (expense allowances) 

• Consulting fees for special projects** 

• Saurer employee stock option program 

*Non-Executive Board members do not normally receive fixed or variable bonuses. In the context of long- 

term option investment programs, entailing financial risk for the participant, long-term bonus contribu- 

tions are allocated. In 2007, the board of directors will receive retention bonuses under the 2007 long- 

term retention program. These bonuses are being accrued in the years 2004 to 2007. 

**Board members of Saurer have special experience in the areas of finance, process management, inno- 

vation management, Asian markets or textile and automotive industry. Saurer tries to make use of this 

experience beyond the limited framework of Board meetings. The resulting consulting assignments are 

limited to projects with an effort of a maximum of 40 workdays. Consulting assignments are compen- 

sated with fees comparable to market. 

Board fees and other cash compensations are approved by the full Board. The Chairman and the CEO 

decide about the allocation of stock options to Board members (last time in 2003). 

Senior Management (including Executive Director) 

The basic principles of compensation for Senior Management can be summarized as follows: While the 

overall compensation over the mid-term must be in line with the market, the yearly compensation should 

clearly reflect the financial results of the group or of the unit of responsibility. Variable elements (cash 

bonus and return from stock options) should constitute a significant portion of the total compensation. 

Compensation objectives of Senior Management and business unit managers are defined between the 

CEO and the Chairman, and approved by the full Board of Directors once a year. 

The following elements of compensation are applied on the level of Senior Management: 

• Base salary cash 

• Cash bonuses, also including payments under the stock option program for employees of Graziano 

(Transmission Systems) 

• Other cash compensations (expense allowances, company cars, etc.) 

• Saurer employee stock option program 

• Pension fund and other benefit allocations 

All senior managers and managers of business units have several individual and financial objectives 

defined yearly and serving within the defined ranges as a basis for cash bonuses. These cash bonuses have 

a range of zero to a maximum of 2.5 times a base salary.


Saurer measures operating profit and net operating assets for all business units on a worldwide consolidated 

basis, which allows financial bonuses to be linked to key financial figures such as returns on net operating 

assets or economic value added. 

Long-term bonuses can be tied to long-term strategic initiatives and are in excess of the yearly variable 

bonuses. For instance management (not the Board) is scheduled to receive additional long-term bonuses 

in 2006, as the TEMPUS cost saving targets were achieved in 2005. 

In 2007, management will receive retention bonuses under the 2007 long-term retention program. These 

bonuses are being accrued in the years 2004 to 2007. 

Saurer does not issue stock to employees or Board members, unless acquired through the stock option 

programs. 

Non-Executive Directors of the Board 

The Graziano stock option program pertains to Graziano stock. On a consolidated group level, the 

program in substance amounts to a phantom stock program resulting in cash compensation, since no 

Graziano stock is issued without being purchased back immediately. 

5.2 Compensations in detail 

Bonuses and retention accruals 

Bonuses as disclosed in the table are accrued values, related to the performance in 2005. 

The accruals for the 2007 long-term retention program are not included with the bonuses as shown above. 

These accrual amounts included in the income statement for 2005 are EUR 356k for non-executive 

directors and EUR 443k for Senior Management. 

Board Various Total 

(amounts in EUR 000) fees payments compensation 

Prof. Dr. Giorgio Behr (Chairman) 78 126 204 

Ulrich Schmidt (Deputy Chairman and Audit Committee) 77 12 89 

Prof. Dr. Günther Schuh (Audit Committee) 58 6 64 

Heinz Bachmann 55 73 128 

Alexis Fries 55 6 61 

Hans-Georg Härter 47 6 53 

Total 370 229 599 

Executive Director, Senior Management 

Various Total 

(amounts in EUR 000) Salaries Bonuses payments compensation 

Total 966 648 43 1 657 

Highest individual compensation 472 252 12 736 


PAGE 98 



Contributions to pension funds 

The total of contributions to pension funds for Senior Management was EUR 329k. No pension contribu- 

tions are made on behalf of non-executive Board members. 

Payments to former Management and Directors 

There were no compensation payments to former members of the Board, nor of Senior Management, 

neither were options issued. 

Option programs on Saurer shares 

In 2005, no options were issued. 

All options entitle the holder to buy one Saurer share. 

Saurer shares and third party options held. 

Shares Options 

31.12.05 31.12.05 

Non-Executive Directors 207 100 214 000 

of the Board 

Senior Management 500 71 400 

(incl. Executive Director) 

Saurer does not issue shares to Board members or Senior Management, unless if acquired under the stock 

option program. Shares owned were therefore either acquired on the market or in connection with 

exercising options. 

The third-party options were issued in 2004 by a bank and were acquired by non-executive directors and 

by Senior Management and other top management at market value on a voluntary basis. 

Loans and advance facility to Senior Management. 

Options 

Year Options held Strike Compensation Duration 

issued issued 31.12.05 CHF value CHF (years) 

Non-Executive Directors 2003 18 000 15 000 50.25 3.30 5 

2002 21 000 7 000 21.25 4.39 5 

Total 22 000 

Senior Management 2003 29 000 26 500 50.25 10.90 5 

(incl. Executive Director) 

Former Members 2003 1 500 750 50.25 10.90 5 

of Senior Management 

In order to facilitate the acquisition of third-party call options on Saurer shares in 2004, the company gave 

an interest-free advance facility to Senior Management until July 2007, with a net balance at the end of 

2005 of EUR 615k (EUR 1 275k in 2004). No advance facilities or loans were given to Board members. 

207 600 285 400


6. SHAREHOLDERS’ PARTICIPATION 

RIGHTS 

6.1 Voting rights restrictions and representation. Each issued registered share has one voting right. 

The voting rights of treasury shares are suspended while they are under the control of Saurer Ltd. or its 

subsidiaries. A shareholder may be represented only by a written proxy, proxy by another shareholder, the 

by the independent representative of shareholders, the representative appointed by the company or the 

shareholder‘s custodian bank. 

6.2 Statutory quorums. In general the Shareholders’ Meeting passes its resolutions and conducts its votes 

by simple majority of the voting rights represented, without regard for the number of shareholders pres- 

ent or the share capital represented, unless the requirements of the law or the articles of incorporation 

are contrary. 

A requisite majority of at least two-thirds of the voting rights represented is required for the following 

resolutions: 

• Change in the company’s purpose 

• Introduction of voting shares or a restriction in voting rights 

• Restriction on the transferability of registered shares (“Vinkulierung”) 

• Authorized or conditional increase of capital 

• Increase of capital from reserves, in exchange for contributions in kind or the granting 

of special privileges 

• Restriction or exclusion of subscription rights 

• Transfer of the domicile of the company 

• Dissolution of the company 

A requisite majority of at least two-thirds of the whole share capital is required for the following resolutions: 

• Change or removal of the requirement to report participations in the company above certain thresh- 

olds, and the obligation to submit a public tender offer; 

• Change or removal of the regulation concerning minimum and maximum number of Members of the 

Board of Directors and their period of office, as well as the voting-out of a majority of the Members of 

the Board of Directors, if the resolution is proposed or supported by a shareholder or group of share- 

holders who have not reported their participations in the company in accordance with the requirement 

mentioned in 2.6 above, and have not submitted a public tender offer. 

6.3 Convocation of the General Meeting of Shareholders. The convocation of the General Meeting of 

Shareholders occurs at least 20 days before the General Meeting in the official publication organ of the 

company (“Swiss Official Gazette of Commerce”). In addition the Board of Directors sends an invitation 

by mail to the shareholders and beneficiaries of shares registered in the share register. 

6.4 Agenda. The invitation to the General Meeting of Shareholders mentions all business to be discussed 

as well as proposals of the Board of Directors or of shareholders who have asked for an item to be placed 

on the agenda. No resolution can be passed unless the business to be discussed and the related proposals 

have been properly announced, except for the convocation of an extraordinary General Meeting or the 

proposal for a special audit. 

Shareholders representing share capital of half a million Swiss francs nominal value may ask for an item 

to be placed on the agenda. The request must be submitted in writing, specifying the matters to be dis- 

cussed and the proposals made, within a time limit published by the company. 


PAGE 100 



6.5 Registrations in the share register. The company maintains a share register in which the details of 

the owners and beneficiaries of the registered shares are recorded. Nominees will be registered only if 

they disclose the identity of the beneficiary owners of the shares. 

7. CHANGES OF CONTROL AND 

DEFENCE MEASURES 

7.1 Duty to make an offer. If an investor acquires a minimum of 33 1 /3 percent of the capital and voting 

rights of Saurer Ltd., there is an obligation to submit a public tender offer. 

7.2 Clauses on changes of control. There are no provisions for special compensation due to change of 

control for members of the Board, nor for Senior Management. 

8. AUDITORS 

8.1 Mandate and term of office. The group auditors PricewaterhouseCoopers AG, St. Gallen, were first 

appointed as group auditors for the financial year 1990. The auditor-in-charge, Mr. Daniel Ketterer, first 

took up office for the financial year 2003. 

8.2 Audit fees. The total audit fee charged by PricewaterhouseCoopers worldwide for the financial year 

2005 amounts to EUR 1 066 000 (2004: EUR 1 141 000). The audit fees charged by other auditors for the 

financial year 2005 amount to EUR 91 000 (2004: EUR 59 000). 

8.3 Other fees. Fees charged by PricewaterhouseCoopers in respect of non-audit work for the financial 

year 2005 amount to EUR 104 000 (2004: EUR 85 000). 

8.4 Supervisory and control instruments. The Board of Directors monitors the work and audit results of 

the external auditors through the Audit Committee, which meets at least twice a year with the external 

auditors. In 2005 the Audit Committee met three times with the external auditors. The Audit Committee 

further reviews the level of the external audit fees, and Internal Audit coordinates its work program with 

the external auditors.

9. INFORMATION POLICY 


In addition to full-year results, Saurer publishes condensed interim financial information for the first half 

of the fiscal year. The interim financial information is published in the form of a letter to shareholders. 

Saurer also provides stock-price-sensitive information in accordance with the ad hoc publicity require- 

ments of the Listing Rules of the SWX Swiss Exchange. All interested parties have the possibility to direct- 

ly receive from Saurer, via e-mail distribution list, free and timely notification of potentially price-sensitive 

facts. All this information as well as the registration form for the e-mail distribution service can be found 

on the group homepage www.saurer.com (sections Investor Relations and News). Further information is 

available on the homepage such as agenda and minutes of the Annual General Meeting of Share- 

holders. 

For further information, please contact Simone Lalive d’Epinay, Corporate Communications and Investor 

Relations, phone +41 52 264 09 14, fax +41 52 264 09 10, e-mail s.lalive@sgm.saurer.com. 

Important dates for 2006 are as follows: 

• Annual General Meeting of Shareholders: May 11, 2006 

• Publication of half-year results: July 25, 2006 

10. RISK MANAGEMENT 

Risk Management within Saurer is a fundamental requirement for sustaining the success of the company 

into the future and will help avoid threats that could jeopardize business continuity. The key objective of 

enterprise risk management is the protection and growth of shareholder value based on: 

• opportunity-focused, but risk-aware decision-making considering an optimal balance between chan- 

ces and risk avoidance, risk reduction, risk transfer and controlled risk acceptance. 

• identification and assessment of threats affecting the company’s asset value, earnings and cash flow 

strength, but also impacting intangible values such as brand image or the social and environmental 

record. 

The goal is not to avoid all potential risks, but to explore business opportunities optimally in a controlled 

and managed risk environment. 

Risk Management is conducted with a variety of instruments, such as strategic business planning, regular 

business reviews, financial planning and reporting at multiple levels within the organization, with the 

Board of Directors maintaining the oversight role. For business units as well as key corporate functions, 

specific risk maps have been determined. These risk maps provide two-dimensional transparency about 

the likelihood and impact of the most significant risks. They are accompanied by action plans for the ap- 

propriate mitigation of the risks. The risk maps are updated on a regular basis as a result of internal audits, 

risk reporting and periodic and systematic reviews by management. 

There are several central functions (such as Corporate Treasury, Legal Counsel and Internal Audit), which 

educate the organization with respect to the development and use of effective and cost-efficient risk 

management. Within the established Risk Management teams, regular meetings take place to promote 

best practices in order to further develop the embedded risk management culture. 


ADDRESSES WORLDWIDE

PAGE 104 

Saurer 

Saurer AG Textilstrasse 2 T +41 71 447 52 91 www.saurer.com 

CH-9320 Arbon F +41 71 447 52 88 info@sgm.saurer.com 

Saurer Management AG Bahnhofplatz 12 T +41 52 264 09 11 www.saurer.com 

CH-8401 Winterthur F +41 52 264 09 10 info@sgm.saurer.com 

Saurer Group Investments Ltd. Campbell Corporate Services Ltd. T +1 809 949 2648 

The Bank of Nova Scotia Building F +1 809 949 2648 

P.O. Box 268, George Town T +377 97 70 40 43 

KY-Grand Cayman F +377 97 70 40 44 

British West Indies 

Aktiengesellschaft Adolph Saurer Textilstrasse 2 T +41 71 447 52 91 www.saurer.com 


CH-9320 Arbon F +41 71 447 52 88 info@sgm.saurer.com 

Saurer GmbH & Co. KG Landgrafenstrasse 45 T +49 2161 28 0 www.textile.saurer.com 

DE-41069 Mönchengladbach F +49 2161 28 2645 info@textile.saurer.com 

Postfach 100435 

DE-41004 Mönchengladbach 

Sales & Customer Support Jan Röttgering 

Technology & Logistics Stefan Kross 

Finance Claus Ulrich Mai 

Branch: 

ADDRESSES WORLDWIDE 

Company Address Telephon/fax Internet/e-Mail Management 

Allma Leonhardstrasse 19 T +49 831 688 0 www.allma.saurer.com Dr. Dirk Burger 

DE-87437 Kempten F +49 831 688 320 info@allma.saurer.com 

Postfach 2580 

DE-87415 Kempten 

Barmag Leverkuser Strasse 65 T +49 2191 67 0 www.barmag.saurer.com Klaus Karrasch 

DE-42897 Remscheid F +49 2191 67 1204 info@barmag.saurer.com Martin Stillger 

Barmag-Spinnzwirn Zwickauer Strasse 247 T +49 371 2388 0 www.barmag.saurer.com Martin Stillger 

DE-09116 Chemnitz F +49 371 2388 349 info@barmag-chemnitz.de 

Neumag Christianstrasse 168–170 T +49 4321 305 0 www.neumag.saurer.com Dr. Carsten Voigtländer 

DE-24536 Neumünster F +49 4321 305 212 info@neumag.saurer.com 

Schlafhorst-Rotorspinning Blumenberger Strasse 143–145 T +49 2161 28 2880 www.schlafhorst.saurer.com John Cundill 

DE-41061 Mönchengladbach F +49 2161 28 2803 info@schlafhorst.saurer.com 


DE-41004 Mönchengladbach 

Schlafhorst-Winding Carlstrasse 60 T +49 2161 28 0 www.schlafhorst.saurer.com Gerard Küsters 

Addresses worldwide 

DE-52531 Übach-Palenberg F +49 2161 28 5302 info@schlafhorst.saurer.com 

Postfach 12 60 

DE-52527 Übach-Palenberg

Volkmann Weeserweg 60 T +49 2151 717 01 www.volkmann.saurer.com Dr. Dirk Burger 

DE-47804 Krefeld F +49 2151 717 478 info@volkmann.saurer.com 


DE-47723 Krefeld 

Zinser Hans-Zinser-Strasse 1–3 T +49 7163 14 0 www.zinser.saurer.com Heinz Wilhelm Kamp 

Austria: 

DE-73061 Ebersbach F +49 7163 14 250 info@zinser.saurer.com 

Postfach 1480 

DE-73058 Ebersbach 

Fehrer GmbH Wegscheiderstrasse 15 T +43 732 37 39 0 www.fehrerag.com Gert Löhmer 

AT-4021 Linz (Leonding) F +43 732 38 16 72 office@fehrerag.com 

Saurer Holding GmbH Wegscheiderstrasse 15 T +43 732 37 39 0 www.fehrerag.com Peter Stiefenhofer 

Brazil: 

AT-4021 Linz (Leonding) F +43 732 38 16 72 office@fehrerag.com 

Saurer do Brasil – Máquinas Ltda. Av. Theodomiro Porto da Fonseca, T +55 51 3 579 8507 www.barmag.com.br Volker Lübke 

2123 F +55 51 3 588 1363 barmag@barmag.com.br 

Bairro Cristo Rei 

BR- 93032-000 São Leopoldo (RS) 

Schlafhorst do Brasil Ltda. Rua Domingos Afonso 460-térreo T +55 11 6101 2010 www.textile.saurer.com Günter Bammer 

China: 

Vila Santa Clara F +55 11 6916 6680 schlafhorst@schlafhorst.com.br 

BR-03161-090 São Paulo (SP) 

Barmag Beijing Machinery Co., Ltd. 18, Tian Shui Yuan Dong Jie T +86 01 6501 8821 www.barmag.saurer.com Dieter Abele 

Chaoyang District F +86 01 6501 9014 bbm@barmagpek.com.cn 

CN-100026 Beijing 

Saurer China Equity Ltd. Units 3806B–3807 T +852 2827 4314 www.saurer.com Peter Stiefenhofer 

38th Floor, Wu Chung House F +852 2827 5250 info@saurer.com 

213 Queen’s Road East 

HK-Wanchai 

Saurer China Investments Ltd. Units 3806B–3807 T +852 2827 4314 www.saurer.com Peter Stiefenhofer 

38th Floor, Wu Chung House F +852 2827 5250 info@saurer.com 

213 Queen’s Road East 

HK-Wanchai 

Saurer (China) No. 9 Chang Yang Street T +86 512 8188 5998 www.textile.saurer.com Xu Linfeng 

Technology Co. Ltd. Suzhou Industrial Park F +86 512 8188 5999 info@china.saurer.com Joachim Diezl 

CN-215024 Suzhou, Jiangsu Province 

Saurer Far East Ltd. Units 3806B–3807 T +852 2827 4314 www.textile.saurer.com Matthias Rudolph 

38th Floor, Wu Chung House F +852 2827 5250 wscasia@compuserve.com Peter Stiefenhofer 

213 Queen’s Road East barmaghk@netvigator.com Jan Röttgering 

HK-Wanchai 

ADDRESSES WORLDWIDE PAGE 105 


Addresses worldwide

PAGE 106 

Saurer Jintan Textile 98 Huacheng Road T +86 519 231 9966 office@cn-jtmw.com Pan Xue Ping 

Machinery Co. Ltd. CN-213200 Jintan Jiangsu F +86 519 231 9977 www.saurer.com 

Saurer Textile Machinery Changjiang Nan Road 28–75 T +86 510 5342 721 www.textile.saurer.com Tony Yung 

(Wuxi) Co., Ltd. Land Lord No. 100 F +86 510 5342 799 yung@btw.saurer.com 

CN-214028 Wuxi New District 

Wuxi, Jiangsu Province 

Saurer Trading + Service Ltd. Units 3806B – 3807 T +852 2866 35 01 www.saurer.com Peter Stiefenhofer 

Czech Republic: 

38th Floor, Wu Chung House F +852 2861 27 15 wscasia@compuserve.com 

No. 213 Queen’s Road East 

HK-Wanchai 

Saurer Czech Republic s.r.o. Lhota za C Kostelcem 261 T +420 491 469 200 www.textile.saurer.com Daniel Svrcina 

Denmark: 

CZ-549 41 Cerveny-Kostelec F +420 491 469 502 info@czech.saurer.com 

M&J Fibretech a/s Vejlevej 3 T +45 75 64 62 00 www.mjfibre.com Henning Skov Jensen 

Germany: 

DK-8700 Horsens F +45 75 64 59 00 mjfibre@mjfibre.dk 

Autefa automation GmbH Röntgenstrasse 1–5 T +49 821 2608 0 www.autefa.com Herwig Hirschek 

DE-86136 Friedberg F +821 2608 299 email@autefa.de Alfred Von-Rhein 

Dirk Falise 

Manfred Schäffler 

Enka tecnica GmbH Boos-Fremery-Strasse 62, T +49 349 762 82 0 www.enkatecnica.com Uwe Gaedike 

DE-52525 Heinsberg F +49 349 762 82 02 sales@enkatecnica.com 

ERMAFA Kunststofftechnik Zwickauer Strasse 247 T +49 371 9097 700 www.ermafa.de Uwe Hartmann 

Chemnitz GmbH DE-09116 Chemnitz F +49 371 9097 709 info@ermafa.de 

TEMCO Components GmbH Fuldaer Strasse 19 T +49 9732 87 0 www.temco.de Josef Steiger 

DE-97762 Hammelburg F +49 9732 87 310 sales@temco.de 

Texparts GmbH Marin-Merian-Strasse 8 T +49 711 585 21.0 www.texparts.de Josef Steiger 

DE-70736 Fellbach F +49 711 585 21-59 sales@texparts.de 

Schlafhorst Waldnieler Strasse 73 T +49 2161 28 0 www.schlafhorst-electronics.de Knut Richter 

Electronics GmbH DE-41068 Mönchengladbach F +49 2161 28 3575 info@schlafhorst-electronics.de Manfred Tillmann 

India: 



Saurer India Pvt. Ltd. EIL Complex T +91 22 565 27 900 www.textile.saurer.com Khurshed M. Thanawalla 


414, Senapati Bapat Marg F +91 22 565 27 90 management@saurerindia.com 

Lower Parel 

IN-Mumbai 400 013 

`

Zinser Textile Systems Pte. Ltd. c/o A.T.E. Enterprises Pvt. Ltd. T +91 22 2287 2245 www.ateindia.com Kaushik Pate 

Italy: 

43, Dr. V.B. Gandhi Marg, Fort F +91 22 2204 1690 ate_fort@ateindia.com 

IN-Mumbai 400 023 

Fincarde S.p.A. Strade Campagné 16 T +39 015 848 41 11 www.fincarde.com Dr. Arnd Grimm 

Mexico: 

IT- 1390 Biella F +39 015 849 18 80 info@fincarde.com 

Saurer Mexico SA de C.V. Av. Sor Juana Inés de la Cruz T +52 55 5565 6200 www.saurer.com Manuel Herrero Dominguez 

Poland: 

No.14–7° piso F +52 55 55 65 6160 saurer@prodigy.net.mx 

Col. San Lorenzo C.P. 

MX-54000 Tlalnepantla 

SEP Sp z o.o. ul. Transportowa 1a T +48 68 4572 5500 www.sep-electronics.pl Claus Brunen 

Switzerland: 

PL-68-300 Lubsko F +48 68 4572 501 mw-sep@wp.pl Manfred Tillmann 

Saurer Hamel AG Textilstrasse 2 T +41 71 447 51 11 www.saurerhamel.com Dr. Jürg Henz 

CH-9320 Arbon F +41 71 447 54 11 info@saurerhamel.com 

Heberlein Fibre Technology Inc. Bleikenstrasse 11 T +41 71 987 44 44 www.heberlein.com Heinz Michel 

CH-9630 Wattwil F +41 71 987 44 45 hft@heberlein.com 

Electrotex AG Bleikenstrasse 11 T +41 71 987 43 00 www.electrotex.ch Heinz Michel 

Turkey: 

CH-9630 Wattwil F +41 71 987 43 01 info@electrotex.ch 

Saurer Middle East Tekstil Büyükdere Cad. Dergiler Sok. No:5 T +90 212 272 3820 www.textile.saurer.com Mustafa Gürpinar 

Makinalari Dis Ticaret A.S TR-80300 Esentepe / Istanbul F +90 212 267 38 37 fdurular@middleeast.saurer.com 

USA: 

Melco Industries Inc. 1575 West, 1245th Avenue T +1 303 457 1234 www.melco.com Peter Kern 

US-Denver, CO 80234 F +1 303 252 0508 info@melco.com 

Saurer Inc. 8801 South Boulevard T +1 704 554 08 00 www.textile.saurer.com Bob Sage 

P.O. Box 240828 F +1 704 554 73 50 info@saurerinc.com 

US-Charlotte, NC 28224 

ADDRESSES WORLDWIDE PAGE 107 


Addresses worldwide

PAGE 108 



Transmission Technology 

Graziano Trasmissioni Group S.p.A. Via Cumiana 14 T +39 011 9570 1 www.grazianotrasmissioni.it Marcello Lamberto 

IT-10090 Cascine Vica Rivoli (TO) F +39 011 959 4803 info@grazianotrasmissioni.it 

Fairfield Manufacturing US 52 South T +1 765 772 4000 www.fairfieldmfg.com Gary Lehman 

Company Inc. US-Lafayette, IN 47909 F +1 765 772 4001 

China: 

Graziano Trasmissioni No. 9 Changyang Street T +86 512 818 85 118 www.grazianotrasmissioni.it Gianni Sarti 

Suzhou Operation – B.U. of Saurer Suzhou Industrial Park F +86 512 818 85 188 info@grazianotrasmissioni.it 

(China) Technology Co. Ltd. CN-Jiangsu Province, 215024 

India: 

Graziano Trasmissioni India Pvt. Ltd. Plot no. 14, Udyog Kendra T +91 120 235 0820 www.grazianotrasmissioni.it Marcello Lamberto 

Italy: 

Greater Noida, Gautam Budh Nagar F +91 120 235 0830 gtindia@grazianotrasmissioni.it 

IN-Uttar Pradesh 201 304 

Graziano Trasmissioni S.p.A. Via Cumiana 14 T +39 011 9570 1 www.grazianotrasmissioni.it Marcello Lamberto 

IT-10090 Cascine Vica Rivoli (TO) F +39 011 959 4803 info@grazianotrasmissioni.it 

I.T.T. S.r.l. Frazione Grinzano T +39 0172 471 511 www.grazianotrasmissioni.it Marcello Lamberto 

Switzerland: 

IT-12040 Cervere (CN) F +39 0172 474 601 info@grazianotrasmissioni.it 

Graziano Trasmissioni Group AG Textilstrasse 2 T +41 71 447 51 11 www.grazianotrasmissioni.it Salvi Piazza 

UK: 

CH-9320 Arbon F +41 71 447 54 11 info@grazianotrasmissioni.it 

Graziano Trasmissioni UK Ltd. 9, Harley Industrial Park, T +44 1480 403 453 www.grazianotrasmissioni.it Mike Finnigan 

USA: 

Paxton Hill F +44 1480 403 454 enquiries@grazianouk.com 

St. Neots-Huntingdon 

GB-Cambs PE19 6TA 

Fairfield Manufacturing US 52 South T +1 765 772 4000 www.fairfieldmfg.com Gary Lehman 

Company Inc. US-Lafayette, IN 47909 F +1 765 772 4001 

Graziano Trasmissioni 2222 Northmont Parkway, T +1 770 476 0496 www.grazianotrasmissioni.it Gianni Sarti 

North America Inc. Suite 300 F +1 770 623 3290 info@grazianotrasmissioni.it 


US-Duluth, GA 30096

SHARE STATISTICS

PAGE 110 

SHARE STATISTICS 

Saurer registered share 2005 2004 2003 2002 2001 

Symbol SWX: SAUN, Security No. 1 234 514 nom. CHF 9.50 nom. CHF 11.50 nom. CHF 11.50 nom. CHF 12.50 nom. CHF 12.50 

Nominal share capital 

Number of shares 14 548 000 15 430 000 15 430 000 15 430 000 15 430 000 

Nominal share capital (CHF) 138 206 000 177 445 000 177 445 000 192 875 000 192 875 000 

Conditional capital 1) 

Number of shares (for convertible bond) 3 000 000 3 000 000 3 000 000 3 000 000 3 000 000 

Nominal value (CHF) 28 500 000 34 500 000 34 500 000 37 500 000 37 500 000 

Number of shares (for stock option plans) 1 250 000 1 250 000 1 250 000 1 250 000 1 250 000 


Authorized capital 1) (for capital market transactions) 



Shares issued (year-end) 


Shares with rights to dividends (year-end) 


Treasury shares (year-end) 

Number of shares 119 780 1 189 630 1 111 861 1 378 980 1 226 070 

Distributions 

Capital repayment per share (CHF) 1.80 2.00 – 1.00 – 

(in respect of the financial year shown; 2005: proposal to 

the General Meeting of Shareholders) 

Total distributions (CHF) 2) 29 096 000 13 682 122 15 430 000 – 12 344 000 

(shown for year of payment) 

Stock market capitalization 

Year-end (CHF) 1 262 469 250 954 104 790 786 065 831 432 068 865 426 117 900 

Key data per share (EUR) 3) 

Earnings (loss) per share (EUR) 3.72 4.71 3.33 2.37 -3.61 

Cash flow from operating activities (EUR) 4.98 11.52 8.83 10.28 8.20 

Shareholders‘ equity (EUR) 39.05 36.08 32.68 30.65 29.21 

Key data per share (CHF) 3) 

Earnings (loss) per share (CHF) 5.76 7.27 5.06 3.48 -5.46 

Cash flow from operating activities (CHF) 7.71 17.79 13.43 15.07 12.39 

Shareholders‘ equity (CHF) 60.73 55.74 50.91 44.58 43.29 

Stock market prices (CHF) 

High (CHF) 98.90 70.00 59.00 40.75 79.00 

Low (CHF) 67.80 54.00 22.45 22.50 21.00 

Year-end (CHF) 87.50 67.00 54.90 30.75 30.00 

1) The total of new shares issued must not exceed 5 000 000. See also Note 16, page 65. 

2) In respect of the year 2003 there was no cash dividend payment and no capital repayment. Instead, put option rights were issued in 2004 with an intrinsic value equal to the envisaged dividend 

2) level. 14 105 280 options were exercised with a volume-weighted average trading price of CHF 0.97. 

3) The key data for 2004 is restated. For details see pages 49 and 50. 

Share statistics

Imprint. 

Publisher: Saurer Ltd. 

Concept/Design: New Identity Ltd., Basel (CH) 

Text: Saurer Corporate Communications, Winterthur (CH) 

Photography: Raffael Waldner, Zürich (CH); 

Nic Hunger, Zürich (Pages 94/95), Saurer Ltd. (Page 15) 

Pre-press: WWS Medientechnik, Ditzingen (D) 

Print: Morf & Co. AG, Basel (CH) 

© Saurer Ltd. 2006

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