We make our customers successful. - Oerlikon Barmag

LIVING SAURER. 

THE ANNUAL REPORT 2003.

Financial Highlights. 

Key data. 

(EUR 000) 2003 2002 

Change 

in % 

Sales 1 745 874 1 697 492 2.9 

Operating profit before sale of discontinuing operations 87 018 69 353 25.5 

% of sales 5.0% 4.1% 

Profit on sale of discontinuing operations 988 – 

Operating profit 88 006 69 353 26.9 

Net profit 47 200 33 466 41.0 

% of sales 2.7% 2.0% 

Depreciation and amortization 78 189 79 344 –1.5 

% of sales 4.5% 4.7% 

EBITDA 166 195 148 697 11.8 

Cash flow (Net cash from operating activities) 125 025 144 999 –13.8 

% of sales 7.2% 8.5% 

Capital expenditure 50 913 49 571 2.7 

Employees (year end) 10 286 10 760 –4.4 

Total assets 1 250 979 1 301 100 –3.9 

Shareholders’ equity 467 871 430 595 8.7 

% equity financing 37.4% 33.1% 

Stock market capitalization (year end) 504 568 297 036 69.9 

Share summary. (EUR) 

Shareholders’ equity per share 32.68 30.65 

Earnings per share 3.33 2.37 

Cash flow (Net cash from operating activities) 8.83 10.28 

Capital repayment 1) – 0.68 

1) The Board of Directors of Saurer Ltd. intends to propose to the General Meeting of Shareholders on May 13, 2004, a 

share repurchase with capital redemption for a maximum of 930 000 registered shares. The repurchase of the shares to 

be canceled shall be by issue of negotiable put options – around 16.60 options are foreseen per registered share. The 

price for this repurchase by Saurer Ltd. will be determined after the General Meeting of Shareholders. Under market 

conditions at the time of this communication a premium of 30% is planned.

The business year 2003. 9 

Financial report 2003. 40 

Consolidated financial statements. 49 

The financial report of Saurer Ltd. 80 

Corporate Governance. 86 

Addresses worldwide. 106 

Share statistics. 110

Saurer employees portray, photographically, their everyday life 

during and after work. Here or in China, with or without clients, 

day or night, alone or in groups, with machines or without. They 

show how, day in, day out, they integrate the vision in their lives 

and routines.

THE BUSINESS YEAR 2003. 

9

Dear Shareholders, 

For Saurer as a whole, business development was good in 2003. A gratifying revival of demand for 

synthetic fiber plants and for embroidery machines, further reduction of fixed costs throughout the 

textile machine business and an improved result for surface technology – all these outweighed recent 

weaknesses in transmission technology and in the natural fiber spinning business. The reported profit 

includes significant restructuring costs incurred as part of our Tempus program. These pre-emptive cost 

measures will lead to further improvements in efficiency and to substantial cost savings over the next two 

years. Tempus will also have a lasting effect on our culture, emphasizing customer needs, cost-effectiveness 

and teamwork. 

The Group’s order intake of EUR 1 709m was down by 5% when compared with the record high of 2002. 

Sales were up, however, by 3% to EUR 1 746m. The improvement in profit of EUR 14m results partly 

from the increase in sales, but mainly from the sustained and systematic cost reductions we have made 

in recent years. Earnings before interest and tax (EBIT) increased to EUR 88m from EUR 69m in the prior 

year. This includes restructuring costs in the textile business of EUR 25m (prior year EUR 25m). Earnings 

before interest, tax, depreciation and amortisation (EBITDA) rose from EUR 149m to EUR 166m. The profit 

before minorities improved from EUR 35m in the previous year to EUR 49m in 2003. Cash flow from operating 

activities was EUR 125m. Net debt was reduced by EUR 73m to EUR 32m. The degree of equity 

financing amounts to 37% (33% in the previous year). 

Strong capital investment was made in Transmission Systems – 40% of Saurer’s total investment of EUR 

51m, with 53% made in the textile business and 7% in Surface Technology. 

We regularly examine the value of capitalized goodwill using discounted cash flow analysis, to comply 

with the requirements of IFRS reporting rules. On the basis of our present medium-term planning, there 

is no impairment of goodwill. 

10 

Textile Division – from machines to total solutions. 

2003 saw a further shortening of the Textile machinery business cycle. After an upswing late in 2000 and 

a decline in the latter half of 2001 the natural fiber business revived faster than expected in the second 

quarter of 2002, only to subside again in the second quarter of 2003. Fortunately the synthetic fiber 

business, whose cycles are differently phased, compensated for this with an upswing starting late 2002, 

such that Textile Division sales in total showed a significant increase of 5% in 2003, up to EUR 1 275m. 

Order intake was down in 2003, by 5% to EUR 1 233m.

Asian markets in particular, led by China, but also Turkey, performed strongly and exceeded our expectations 

with a high demand for technologically advanced products. By contrast the demand in Europe 

and America remained stagnant, apart from a few exceptions. 

In natural fibers Saurer achieved an order intake in 2003 of EUR 636m (EUR 854m, –26%) and sales of 

EUR 733m (EUR 774m, –5%). With the slackening of demand in the second half of 2003, utilization of 

production capacity in the first half of 2004 will be well down from the high levels of last year. However, 

thanks to their high flexibility and cost discipline, our business units in the natural fiber sector are able 

to absorb the effects of these short cycles with swings of up to 30% of capacity utilization from one 

quarter to the next. 

Order intake for synthetic fiber plants was EUR 596m, 33% above the low level of the previous year, 

leading to a high order book at the end of the year. Sales were also up, by 24% to EUR 543m (prior year 

EUR 437m). 

These volume increases and the improved cost base brought the synthetic fiber plant business back into 

profit, with all business units in the sector showing positive results. Neumag, manufacturing machines 

for production of carpet yarn and synthetic staple fiber, pursued its positive trend of recent years, not 

only in respect of orders and sales, but also in its profit margins. Barmag’s texturizing machinery also 

profited from a strong market revival. Increased sales, in combination with significant cost reductions 

following relocation of production to China and the Czech Republic, enabled this division to return a 

satisfactory result again after four years of losses. Barmag’s filament spinning machine business, which 

is under extreme price pressure from Japan with highly unfavorable foreign exchange rates (Euro/ 

Yen/Dollar), and also from local competitors in China, managed a notable improvement in 2003 without 

achieving a break-even result yet. 

Despite the improved market conditions, our structural improvements in the textile business are being 

pursued intensively. The outsourcing programs are essentially concluded. The last major parts manufacturer 

in Germany, Schlafhorst Parsys, was closed at the end of August, its business to a great extent 

passed on to third parties. Our sales, service and production facilities in Asia are developing rapidly. 

Our Tempus program, started 15 months ago, aims to re-engineer business processes radically throughout 

the Group, realigning everything we do to achieve customer satisfaction with maximum efficiency. 

These measures have been defined for all business units and will be implemented largely in 2004. The 

legal structure in Germany has been streamlined, with the previously separate textile division companies 

now merged into one company with several branches; this will simplify administration and reduce taxes. 

The end product of Tempus will be a new company culture, increased customer benefit and reduction of 

fixed costs by EUR 35m in 2005. Most of the cost of this program has been accrued in 2003. 

11

As a provider of complete solutions in yarn production, Saurer has made great progress in 2003 and is 

now able to offer its customers solutions extending from project finance all the way to handover of turnkey 

plants. As a further sign of our commitment to innovation, Saurer introduced 13 new products in 

2003 and improved many others, thereby confirming and strengthening our position as market leader. 

12 

Transmission Technology: 

pressure on volumes and prices. 

2003 was a year of consolidation for Transmission Systems. Our customers in the automobile and agricultural 

sectors were affected by general market weakness which led to reduced demand on their part for 

our gearbox components. This, together with conclusion of some older contracts led to a reduction in 

sales of 5% to EUR 363m. Our customers faced strong price competition which they passed on to their 

suppliers. Graziano had to work with reduced prices, and the effect of these was not fully compensated 

by some occasional, non-recurring income earned in the year under report. Operating profit was reduced 

from 10% to 8%. Our continued efforts on the cost side will offset the price reductions at least partially 

in the current year. However a full recovery of the operating margin will only come from higher sales 

volumes; these we hope will follow from our new programs whose delivery is planned for the second half 

of 2004. 

Surface Technology strengthened. 

Surface Technology, which operates mainly in USA, concluded its consolidation phase in 2003 and was 

able to benefit from the incipient market recovery in the second half year. This led to an improved order 

intake of EUR 113m (+4%) and sales of EUR 107m (+1%), which brought Surface Technology back into 

profit. In early December first steps were taken toward divestment of Surface Technology with the sale 

of Xaloy’s operations in Europe. This divestment is being pursued with the aim of realizing a fair price for 

the Group. 

Saurer Textile Solutions – a worldwide network. 

Saurer Textile has nine business units, each of which pursues its business autonomously on a global scale. 

In order to exploit valuable synergies in purchasing, production, technology, marketing and administra-

tion, teams made up of members from different business units work together to address common issues 

and thereby maximize the efficiency of the Group as a whole. The success of this effort depends greatly 

on the Saurer company culture, on the willingness of management to optimize results for Saurer as a 

whole as well as for their own business unit. These common programs can realize cost savings in excess 

of EUR 20m p.a. and at the same time accelerate important projects. Clear definition of business processes 

and open communication of goals and interests are the foundation of this process which is one 

of the main strengths of Saurer Textile Solutions. The question is not one of centralized or decentralized 

solutions, but of efficiency and customer service. 

Neumag: Innovation on a broad front. Neumag’s positive business development continued in 2003 in 

respect of orders, sales and results. High demand for synthetic staple fibers in China led in turn to a need 

for staple fiber production plants, which Neumag were able to exploit most effectively. Thanks to their 

products’ reliability, productivity and optimal cost-effectiveness, Neumag was able to acquire a majority 

of the tendered contracts and thereby build up a significant share of the market. The key to this success 

was the company’s ability to offer complete solutions from one source. 

Neumag also enjoyed success in its carpet yarn business. In particular the S5 compact, modular system 

introduced in the second half of the year was extremely well received by customers worldwide thanks to 

its increased throughput and ease of use. The development phase of a new generation of fleece machines, 

started in 2002, was concluded on time when the first large Spunbond laboratory installation was taken 

into service at a customer presentation day in Neumünster at the end of the year. Neumag’s structure has 

been realigned toward business processes as part of the Saurer Tempus program, resulting in a flatter 

hierarchy with only two levels of management. 

Successful networking in texturizing. Developments in the texturizing sector were highly satisfactory 

this year. Business opportunities in the lively Asian market were successfully exploited by virtue of the 

worldwide supply and production network which now operates in this sector, with production based in 

China, Czech Republic and Germany. Increased volumes and a strengthened cost base have brought this 

business unit back into profit. Further measures have been introduced as part of the Tempus program 

and these will lower the break-even point a good deal more. Thanks to its well-run network, texturizing 

is the most progressive of all Saurer’s business units and best placed to exploit opportunities in our global 

markets. With the introduction of the MPS, a new fully modular texturizing machine with individual 

operation of each section, a revolutionary new concept in production technology was presented. It sets 

new standards in flexible small-scale production with low costs – something our customers continually 

strive to achieve. Its low energy consumption and ease of use are further valuable features which will 

help to differentiate it in the market. 

Success with spinning mills in China. In China, private enterprises have been building up synthetic yarn 

production capacity. They have shown a preference for larger machines, hoping to realize economies of 

13

scale. This build-up is driven by growing demand for yarn from the Chinese textile industry who foresee 

export opportunities deriving from WTO membership, and who also hope to replace imported textiles 

with cheaper local products. Barmag’s spinning mill business has profited well from this investment 

boom, thanks to its market-leading technology. The new-generation winders with up to 16 yarn ends 

per take-up position, together with cost reductions deriving from local production of spinning systems 

led to success in the intensive price competition. Our ability to conceive and supply complete spinning 

mill projects – an ability built up over years by Barmag’s engineers – bore its first fruits here. Also in China 

the first complete installations for making polyester-based tyre cord were sold. With better roads being 

built in China it is expected that polyester will replace the nylon cord which is currently used. 

In East Europe, orders for complete solutions were taken for technical yarn types and also in the clothing 

sector. With customers in Turkey, advanced production conditions enabled the sale of high-performance 

equipment for spinning micro-fine filament, a first in 2003. Barmag’s spinning mill business also did very 

well in India, where the market for synthetic fibers has revived. The component business with polymer 

extrusion pumps also did well, particularly the larger systems. 

Fancynation in Rotor-spinning. The Rotor-spinning business went through a full cycle in 2003. After 

an explosive first half-year, demand cooled off rapidly in the second half. Besides the chronically weak 

markets of Europe and America, demand slackened significantly in Turkey and China during the year. 

SARS, the development of cotton prices, unfavourable currency rates and under-utilized capacity all 

played their part in slowing demand around mid-year. However the Autocoro 360, the new generation 

of Schlafhorst rotor machines, was very well received by the market when it was presented in the third 

quarter. The new drive system not only increases productivity and quality, but enables new yarn effects 

for which in the past expensive add-on equipment was needed. With the fancynation module yarn effects 

and associated fabrics can be simulated in 3-D on the computer, then if they are liked the relevant 

production settings can be loaded straight onto the spinning machine. Together with external partners, 

customers can be offered complete solutions for entire production lines to make complex yarn effects, 

or for the more normal simple yarns. 

To cater for the lower end of the market in China a production line to make manual rotor-spinning 

machines was installed in Saurer’s factory at Suzhou. The first machines have already been delivered to 

customers. Preparations were made to move the rotor-spinning business to Rheindahlen, in order to 

make space at Mönchengladbach with a view to later selling the Schlafhorst facilities there as a business 

park. Saurer Czech, production location for semi-automatic rotor machines, achieved a good result, significantly 

over budget. 

Ring-spinning – from problem child to cash cow. The ring-spinning sector has developed well in 

recent years, with stable results and great flexibility. Apart from large markets such as China, India and 

Pakistan, which are dominated by cheap, locally produced manual machines, ring-spinning business was 

14

concentrated mainly on Turkey. To a lesser extent orders were taken in the middle East, Europe and South 

America – markets in which Zinser can compete well. With new-style electronically controlled drives and 

with machine types suited for manufacture of compact yarns in cotton and wool, Zinser was able to close 

a number of development contracts and launch several new products. In particular some first successes 

with large-scale projects for compact yarns demonstrated that technology had caught up in this sector, 

where previously it had lagged somewhat. New production technology for high-volume wearing parts 

promises to strengthen the developing after-sales market. A new venture in India, started in the spring 

of 2003 to make flyers for the local market, has got off to a good start and met its initial objectives. In 

cooperation with a global partner a new approach to the construction of complete ring-spinning solutions 

has been developed and documented to a marketable level. 

Winding machines hold their own in difficult currency conditions. The winding machine business 

unit benefited again from strong demand from Asia and maintained its high volume of sales as in the 

previous year. Short-term fluctuations were quickly absorbed by increased flexibility in production. 

However the effect of the strong euro in the dollar-oriented Asian markets was to neutralize the benefits 

of our cost reduction programs and prevent any improvement in margins. Efforts to improve market 

share in the hard-fought Chinese market were given high priority. A number of process improvements 

were introduced, for example exact measurement of the yarn length. These improvements will reduce 

the drop-out rate of the cross-wound packages in subsequent processes such as weaving and knitting by 

over 70%. 

Twisting in a headwind. The overall performance of the twisting business was poor, despite one or two 

flashes of success in the carpet cord and tyre cord areas. In Asian markets volumes and prices were under 

enormous pressure caused by unfavourable currency developments, and also by SARS in the first half 

of the year. In particular the Japanese, but also other local Asian competitors, exploited the currency 

conditions, which were favourable for them, to win customers with attractive prices. This put margins 

under pressure, so not only were volumes down but margins were extremely poor on what business 

remained. Substantial cost reductions were achieved in the second half-year as part of the Tempus 

program, including reduction of the workforce by 20% in the fixed cost area, but this was not enough 

to compensate in 2003 for the problems outlined above. New products for manufacture of carpet yarn 

and special effect yarns were introduced successfully in the second half-year; these will influence sales 

and profits in 2004. The twisting group was reorganized in 2003 into a fully integrated business unit with 

an HQ and production locations in Krefeld, Kempten and Suzhou (China). 

Embroidery systems successful with a new program. The embroidery systems business unit as a whole 

had a good year in which it was able to increase its sales and its market share. Under new management 

the various large-scale systems were quickly modularized and the number of parts greatly reduced, which 

improved the cost base. High volume orders from Asia and Turkey led to increased sales and improved 

margins. For Melco’s single and multi-head embroidery machines new software was introduced which 

15

improves productivity by permitting asynchronous operation of the individual heads. This will enable 

Melco to rise clearly above its competition. Melco’s expansion into Asian markets, intended to compensate 

for continuing weakness in the American market, was delayed and the first sales in this area were 

made at the end of 2003. The result was another bad year for Melco. A new spinning process for wool 

yarns was developed and presented to the market in the last quarter. Compared with traditional ringspinning 

it offers a productivity increase of 30 times per spindle. The first of these installations is already 

up and running with a customer in Italy. 

Marketing transformed. Saurer has made big steps on its way from being a textile machine manufacturer 

to a provider of complete solutions. For many specific applications, sometimes working with external 

partners, complete solutions have been developed and documented to a marketable standard. “Turnkey” 

is the word. We plan the factory for our customer, organize the financing, build the factory and start 

the production, leaving him free to concentrate on his customers and his future business. We have also 

searched for new ways to develop links with potential customers, looking beyond the traditional trade 

fairs and advertisements in professional journals. Focussed informational meetings, specific events for 

customers in our laboratories and at their premises, professionally competent advice in the fullest sense 

– these are our new ways of linking to clients. With our integrated service centres in the key markets we 

can offer service around the clock and around the world. We now need new approaches in the markets 

for spare parts, after-sales service and modernization; customer attitudes and competition with local 

pirates are quite different in the new Asian markets from what we are used to in the traditional markets 

of Europe and America. Our internet-based customer support systems are continually being refined and 

represent a very high standard for the industry today. 

18 

Consolidation of Transmission Technology. 

In this period of reduced market activity, Graziano was able to concentrate on the planned consolidation 

of its transmission systems activities. Here the main goal was to realign Graziano’s various production 

plants in respect of products and technologies, aiming for full integration of recent acquisitions and 

introduction of new products which will generate sustained growth in future years. A good number of 

customer projects were progressed into product development. In 2003, Graziano established itself in the 

market as a supplier of complete transmission systems, notably with an order from Alfa Romeo for an 

AWD version of the 156 model, which will be developed in collaboration with Prodrive. A high performance 

twin-clutch gearbox, intended for the attractive sports car market, was completed in prototype. 

A new manual gearbox and differential were developed and tested for the new Aston Martin DB9, which 

will enter production in the second half of 2004. The new Maserati Quattroporte and the Ferrari 

Scaglietti will be fitted in 2004 with the new AMT (Automatic Manual Transmission) gearbox developed 

by Graziano. In the minibus sector the Front PTO (Power Take Off) for the new VW Transporter was

Saurer generates 70% of its textile sales in Asia. 

1995: 30% 

2002: 17% 

2003: 15% 

1995: 35% 

2002: 20% 

2003: 15% 

2003: 70% 

2002: 63% 

1995: 35% 

19

tested and approved, so this can now enter production in the second quarter of 2004. An economically 

priced Inverterachse was produced for use in small town buses; this will first appear in TransBus vehicles 

built by Dennis. Thanks to development work and initial production of timing gears for diesel engines an 

agreement was signed for cooperation with an automobile manufacturer in Northern Europe. Another 

agreement was made with Clubcar to develop a new generation of axles for their gas-driven golf carts 

and town vehicles, to enter serial production in 2005 after a one-year field test. In our plant in India, 

synchromesh units were designed and examples built for practically all Indian tractor manufacturers. 

However, the introduction of synchromesh gearboxes to the Indian tractor market is progressing 

altogether more slowly than expected, so Graziano have taken the opportunity to build up this production 

capability in India to supply world markets, with a plan to double the output in 2004. As part of 

Saurer’s Tempus program a reengineering of business processes is being undertaken at Graziano; it is 

hoped that by 2005 this will compensate for the reduced margins that have resulted from price erosion 

in recent years. 

20 

New applications, strong investment business 

in Surface Technology. 

The consolidation and refocusing of Surface Technology which was undertaken over the past two years 

has started to bear fruit and brought the business back into profit in the second half-year. Xaloy, 

manufacturing cylinders and feed screws for the plastics industry, started to recover first in Asia, then 

gradually in Europe and USA. The factory in Asia achieved its originally planned production level and 

profitability with a half-year delay. The European business of Xaloy was sold in December to the Italian 

O.M.G group, but is reported in the Saurer consolidated accounts burdened with the sizeable start-up 

cost of the new operation in the Czech Republic. In order to improve the value of Xaloy’s US operations 

in preparation for their planned sale, a step was taken to consolidate the market by acquiring a competitor, 

New Castle. This acquisition and subsequent integration of the two competing businesses had the 

effect of reducing the chronic over-capacity in the US market and also realized valuable synergies. The 

effect of these moves could be seen clearly in Xaloy’s results in the final two months of 2003. 

IonBond, the other branch of Surface Technology, enjoyed very satisfactory business development with 

a good profit and strong cash flow. The company provides diamond-hard thin-film metal coatings for 

tools and for decorative applications and occupies the No. 2 position in world markets for its products. 

Low costs and a slight rise in the markets of Europe and USA enabled a gradual improvement in the 

company’s result over the course of the year, finally attaining the satisfactory level of earlier years. New 

applications for coating of components and a strong order book for investment business through to 2005 

bear witness to the recovery of this business.

Outlook. 

This year it is especially hard to give a clear outlook. Currency movements between Yen, Dollar and our 

most important currency, Euro, are a big question mark and clearly a potential threat; however their 

negative effects could be offset by positive developments already visible in many markets, particularly 

the USA. 

In the synthetic fiber business we have projects in prospect which will ensure utilization of existing 

capacity beyond the coming year-end, subject to final agreement on financing. In the natural fiber business 

we see a mixed picture with good prospects for ring-spinning and embroidery but a number of 

question marks affecting rotor-spinning and to some extent twisting. 

As part of the Tempus program we shall further streamline our activities in Germany and Switzerland and 

thereby release our non business related real estate – probably the greater part of the real estate we 

currently occupy in those countries will be released over the next two to five years. These properties will 

be restyled as business parks, rented out and subsequently sold, as we have already done at various 

locations. This will call for capital investment beyond normal levels in the next two years, including 

of course China where we are currently investing EUR 30m in new production facilities. Ultimately the 

sale of real estate no longer required for our businesses in Germany and Switzerland should realize some 

EUR 60m. 

In Transmission Technology we expect a small market improvement in the second half of 2004, based on 

customer forecasts. 

For Surface Technology with its good results and continuing market improvement we see the time is right 

for our planned divestment of this activity. 

For Saurer as a whole we expect 2004 will bring slightly lower sales and a slightly higher profit than 2003. 

21

Thank-you. 

Management and the Board sincerely thank all our employees for their contribution to Saurer’s success. 

Your commitment and willingness to change have given our company the means and the strength it needs 

for further growth and to face the challenges which lie ahead. 

Prof. Dr. Manfred Timmermann and Dr. Mohamad Khouja resigned from the Management Board at the 

Annual General Meeting on May 14, 2003. Prof. Dr. Manfred Timmermann was a member of the Board 

from June 6, 1995, then Chairman from 1999 to 2002 and has made a very significant contribution to 

Saurer’s new direction. Dr. Mohamd Khouja was a member of the Board from June 15, 1994 and he also 

made a valuable contribution, particularly in the area of investor relations and liquidity management. 

Management and the Board thank both these gentlemen sincerely for their efforts. 

Prof. Dr. Giorgio Behr 

Chairman of the Board 

22 

Heinrich Fischer 

CEO and Board Delegate

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

products and markets, its machines and factories. And success large- 

ly hinges on the spirit prevailing within the company, the values guiding 

the routine actions of its people and the processes governing day-to-day 

teamwork. With TEMPUS, Saurer endeavours to create a set of shared 

values to be upheld by all employees – the “Saurer Spirit”. To this end, we 

have held seminars and forums for practically our entire workforce and 

have joined in visualizing the types of service that will delight our customers 

and the means of providing these efficiently. The business procedures for 

all units were jointly redefined with the aim of boosting efficiency and 

customer focus, while increasing added value for our customers. We also 

share the determination to save an additional EUR 35 million in costs 

every year from 2005. Last year, our employees took photographs to express 

the way they experience Saurer and its system of values – pictures that 

document the launch of our radical transformation.

We make our customers successful. Our performance is 

generated from the anticipation of customer needs. We offer 

on-site system and service solutions.

The internationality and the performance of our staff 

ensure our success. Team play and opportunities for personal 

development are systematically cultivated.

We think and act in processes. Our swift response to client 

needs and our critical approach to established wisdoms are 

crucial to our entire operation.

Our economic strength provides us with the freedom 

to act. All activities are subject to an intelligent use of resources. 

Our strong Business Units and the synergies within 

the network guarantee sustainable added value. 

34

We are creating the textile future with our innovations. 

Our know-how, intelligence and creativity enable us to unlock 

new business areas and consolidate our market leadership in 

the world of textiles.

FINANCIAL REPORT 2003.

Management’s discussion of results. 42 

Consolidated financial statements. 

Consolidated income statement. 51 

Consolidated balance sheet. 52 

Consolidated cash flow statement. 53 

Consolidated statement of shareholders’ equity. 54 

Accounting principles. 55 

Notes to the consolidated financial statements. 58 

Principal companies and investments. 73 

Report of the group auditors. 74 

Multiple year comparison. 76 

Financial report of Saurer Ltd. 

Income statement. 81 

Balance sheet. 82 

Notes to the financial statements. 83 

Proposal to the General Meeting. 84 

Report of the statutory auditors. 85

Management’s discussion of results 

Overview of the business year 

For Saurer as a whole, business was very solid in 2003. Despite the 

stronger Euro and continuing pressure on margins sales increased 

by 2.9% over the prior year (6.6% in Swiss francs). This growth in 

sales led to a net profit of EUR 47m, thanks largely to Saurer’s program 

of business process improvement and fixed cost reduction 

(the TEMPUS project), which was started last year. The profit is 

stated after charging restructuring costs of EUR 28m (prior year 

EUR 29m). 

In the textile sector, slackening demand in the natural fiber business 

was compensated by recovery in the synthetic fiber market. 

The trend toward increased demand for high-tech products in 

Asian markets was continued from last year. Reorganization of the 

textile machine business, both operational and legal, was pursued 

as planned, together with successful efforts to become a provider 

of total solutions on a global basis. 

42 

The transmission systems business went through a consolidation 

phase in 2003. A combination of old projects running to conclusion 

and new projects still in preparation resulted in a reduction of 

reported sales and profit. The new businesses acquired last year 

are now fully integrated and an initiative has been launched to improve 

Graziano’s business processes, similar to the textile machine 

business. 

Surface Technology enjoyed a revival of market demand this year 

and also reaped the benefit of its cost improvement measures introduced 

earlier, enabling a welcome return to profitability. The 

planned divestment of this division was realized partially with the 

sale of Xaloy’s European units, while further steps are ongoing to 

divest the remainder of the business. 

The number of employees was reduced by 474 in 2003 (by 508 

after adjusting for acquisitions/divestments).

Order Intake 

Change Adjusted change 

(EUR 000) 2003 2002 in % in % 1) 

Saurer Textile Solutions 1 232 634 1 301 881 –5.3% –2.1% 

Natural Fibers 636 313 853 683 –25.5% –22.7% 

Europe 93 428 169 573 –44.9% 

North and South America 127 088 159 662 –20.4% 

Middle/Far East, Rest of World 415 797 524 448 –20.7% 

Synthetic Fibers 596 321 448 198 33.0% 37.0% 

Europe 74 326 73 319 1.4% 


Middle/Far East, Rest of World 482 936 323 285 49.4% 

Transmission Systems 363 009 380 172 –4.5% –3.7% 

Europe 288 492 298 743 –3.4% 



Discontinuing Operations (Surface Technology) 113 791 109 365 4.0% 12.2% 

Europe 37 937 43 237 –12.3% 

North and South America 59 536 57 788 3.0% 


Total Saurer 1 709 434 1 791 418 –4.6% –1.6% 

Europe 494 183 584 872 –15.5% 



1) adjusted for currency effects and acquisitions 

Order intake for 2003 closed at EUR 1 709m, EUR 82m (4.6%) under 

the high level of the previous year. Adjusted for currency and 

acquisition effects, however, order intake is reduced by only 1.6% 

from the prior year. This reduction results mainly from weaker demand 

in the natural fiber sector and consolidation in Transmission 

Systems, which together outweighed the gratifying market revival 

in the synthetic fiber sector and in Surface Technology. 

The continuing shift of textile business activity from Europe and 

America towards Asia and the Middle East was clearly evident in 

2003. Over 70% of textile business orders came from this region 

in 2003. 


In Transmission Systems the order intake declined. 80% of new orders 

came from Europe, while orders from North America continued 

to suffer from the general weakness in demand for agricultural 

machinery. 

In Surface Technology the order intake was 4% up on the previous 

year. The North American market recovered in all business areas 

during the year and new orders were also booked in Asian markets. 

Business in Europe was just ahead of the previous year, after 

accounting for the sale of the European cylinder and screw business 

shortly before the year-end. Evidence of this positive business 

development was seen in a book to bill ratio of 1.06. 

43


Sales development 


(EUR 000) 2003 2002 in % in % 1) 

Saurer Textile Solutions 1 275 371 1 211 521 5.3% 8.3% 


Europe 126 833 150 747 –15.9% 




Europe 67 113 100 439 –33.2% 



Transmission Systems 363 009 380 172 –4.5% –3.7% 

Europe 288 492 298 742 –3.4% 




Europe 37 512 39 573 –5.2% 



Total Saurer 1 745 874 1 697 492 2.9% 5.7% 

Europe 519 950 589 501 –11.8% 




Compared to the previous year, group sales were up by EUR 48m. 

The cyclical decline in the natural fiber sector was more than compensated 

by a significant increase in the synthetic fiber business. 

The general shift of textile machine business away from Europe and 

North America towards Asia and the Middle East, apparent since 

1999, was clearly evident again this year. Business activity in China 

Order Backlog 


(EUR 000) 2003 2002 in % in % 1) 

Saurer Textile Solutions 391 393 451 315 –13.3% –10.6% 



Transmission Systems – – 


Total Saurer 409 021 466 196 –12.3% –8.8% 


The high order intake of 2002 was not achieved this year because 

of weak demand in the natural fiber sector later in the year. Order 

44 

was more than double that of 2002. In Transmission Systems, with 

immediate order delivery, development of sales was equivalent to 

that of order intake described above. With the additional EUR 7m 

sales of New Castle Industries, acquired in August, Surface Technology 

closed the year with sales ahead of last year, despite the 

divestment of the European Xaloy business units late in the year. 

backlog was increased however in the synthetic fiber sector and in 

Surface Technology.

Development of Operating Result 


(EUR 000) Jan–Jun Jul–Dec Total 

2003 46 989 41 017 88 006 

2002 11 745 57 608 69 353 

In particular, thanks to sustained cost reduction and process improvements, 

the operating result for 2003 exceeds that of the previous 

year by EUR 19m. In the last quarter the result was negatively impacted 

by restructuring costs (TEMPUS project). Apart from this the 

year showed constantly positive results at a good level of profit. Re- 

Results Saurer Textile Solutions 

(EUR 000) 2003 % 2002 % 

Natural Fibers (continuing operations) 

Sales 728 513 100.0% 764 462 100.0% 

Operating profit1) 54 384 7.5% 70 216 9.2% 

Depreciation and amortization 21 351 2.9% 23 112 3.0% 

EBITDA 75 735 10.4% 93 328 12.2% 

Natural Fibers (discontinuing operations – Parsys) 

Sales 4 006 100.0% 9 719 100.0% 

Operating profit1) –4 771 –119.1% –5 317 –54.7% 

Depreciation and amortization 815 20.3% 2 023 20.8% 

EBITDA –3 956 –98.8% –3 294 –33.9% 

Synthetic Fibers 

Sales 542 852 100.0% 437 340 100.0% 

Operating profit1) 9 487 1.7% –27 684 –6.3% 


EBITDA 24 519 4.5% –10 919 –2.5% 

Total Saurer Textile Solutions 

Sales 1 275 371 100.0% 1 211 521 100.0% 



EBITDA 96 298 7.6% 79 115 6.5% 

Capital expenditure 26 869 26 222 

Employees (year end) 6 443 6 929 

1) including non-recurring income and expense (e.g. restructuring). 

In the natural fiber sector a good profit level was maintained 

despite reduced sales, reflecting successful cost management and 

operating flexibility. 

For comments regarding the various business units, please refer to 

the letter to shareholders at the beginning of this annual report. 

Production activity at Parsys came to an end as planned, after several 

years of restructuring. 

Synthetic fiber spinning profited from a real investment boom 

in China, and also from a revival of demand in India, Turkey and 

gular testing of the value of goodwill in the balance sheet showed 

no impairment of value, so as in 2002, no exceptional impairment 

charge was booked. The operating result shown above includes nonrecurring 

operating income (e.g. sale of businesses and real estate, 

net EUR 10m) and expense (e.g. restructuring costs of EUR 28m). 

Eastern Europe. In this market as in others, the ability to offer total 

solutions at the highest level of technology brings a clear competitive 

advantage. 

For comments regarding the various business units, please refer to 

the letter to shareholders at the beginning of this annual report. 

Outlook 

In the natural fiber sector, a reduced utilization of capacity must 

be expected in the first half of 2004. Thanks to the flexibility they 

have built up in recent years these business units will be able to 

45


adapt to this cyclical swing very quickly. In the synthetic fiber 

business a good start into the new year can be expected, on account 

of the high order backlog. The TEMPUS project for improvement 

of business processes across the entire textile business unit will be 

Results Transmission Systems 

(EUR 000) 2003 % 2002 % 

Sales 363 009 100.0% 380 172 100.0% 



EBITDA 57 420 15.8% 62 308 16.4% 


Employees (year end) 2 951 3 021 


For Transmission Systems 2003 was a year of consolidation. 

Limited demand in consumer markets for automobiles and in agricultural 

machinery led to a reduced business level for Graziano as 

supplier, and also to pressure on margins. In the Indian market the 

planned sales volume of synchromesh units for tractors was not attained 

yet. After several years of high sales growth, Graziano used 

the slow down to launch a series of projects: a comprehensive process 

reengineering program was started, integration of new businesses 

acquired in the previous year was completed, India was 

46 

continued as planned, with further cost reductions targeted. 

In 2004 and 2005 Saurer plans to further strengthen its foothold 

in China, with additional capital spending of EUR 20m over both 

years. 

built up to become an important production site for supply to 

international markets and a series of important customer projects 

were pushed ahead to secure future earnings. 

Outlook 

New projects in the pipeline should lead to recovery of volumes 

towards the end of 2004. The build-up of India will continue. A 

realignment of business processes, which has already started, will 

lead to improved efficiency and cost reductions.

Results Discontinuing Operations (Surface Technology) 

(EUR 000) 2003 % 2002 % 

Sales 107 494 100.0% 105 799 100,0% 

Operating profit1) 2 889 2.7% –4 006 –3.8% 


EBITDA 13 857 12.9% 7 409 7.0% 


Employees (year end) 871 786 


After two years of consolidation came the turnaround for Surface 

Technology. Xaloy, manufacturing cylinders and feed screws for 

plastic injection, and IonBond, offering industrial and decorative 

metal coatings, returned to profitability in the second half of 2003, 

with the help of the general economic recovery, and as a result also 

of restructuring programs introduced in recent years, thus building 

a solid base for the intended sale of these business units. 

A first step in this divestment was the profitable sale of the European 

Xaloy units in the last quarter of 2003. New Castle Industries 

Group, a US competitor, was acquired in August 2003 in order to 

eliminate over-capacity and exploit synergies in the North American 

market and thus pave the way for the sale of the US and Asian 

Xaloy business units. 

Financial and Group Results 


(EUR 000) 2003 2002 

Operating profit 88 006 69 353 

Financial expense –17 771 –17 983 

Income taxes –21 716 –16 758 

Profit before minorities 48 519 34 612 

Financial expense was approximately at the same level as in the 

prior year. Reduction of net debt led to reduced interest cost, but 

this was compensated by the higher interest cost relating to pension 

liabilities, reduced gains from the repurchase of the convertible 

bond and the write-off of hedge accruals. In accordance with 

IonBond’s metal coating business also developed positively and 

achieved a good result in 2003. A slight market recovery together 

with significant cost reductions led to the improved result. Ion- 

Bond's strong position in the market was thereby confirmed and 

preparations are ongoing to offer new coating applications. 

Without the 171 employees of the acquired company New Castle, 

700 were employed in Surface Technology at the year-end. 

Outlook 

The divestment of Surface Technology will be pursued. Further improvement 

in business performance is expected in 2004 and this 

will support the successful sale of the remaining business units. 

IAS 32, interest expense amounting to EUR 4.1m was charged to 

the income statement for the 21 ⁄4% convertible bond although 

only an amount of EUR 2.1m was actually paid. The effective tax 

rate was lower than in the previous year despite a higher profit 

before tax, as a result of improved tax planning. 

47


Key Figures and Ratios 

(EUR 000) 2003 2002 

Net Debt –32 377 –105 787 

Liquid assets 109 786 100 687 

Short-term debt –16 793 –44 728 

Convertible bond –84 818 –104 481 

Other long-term debt –40 552 –57 265 

Net Tangible Worth (equity minus goodwill) 351 066 305 543 

Shareholders’ equity 467 871 430 595 

Goodwill –116 805 –125 052 

EBITDA 166 195 148 697 

Operating profit 88 006 69 353 

Depreciation and amortization 78 189 79 344 

Ratios 

Debt-Equity-Ratio 6.9% 24.6% 

Net Debt/Tangible Worth 9.2% 34.6% 

Equity in % of Total Assets 37.4% 33.1% 

Net Tangible Worth in % of Total Assets 28.1% 23.5% 

Net Debt/EBITDA 19.5% 71.1% 

In 2003 the group again showed its ability to generate a strong 

operating and free cash flow. This was used mainly to reduce 

short-term debt and for repurchases of the convertible bond which 

matures in 2005. In total, Net Debt was reduced by EUR 73m, with 

Cash Flow 

(EUR 000) 2003 2002 

Cash flow from operating activities 125 025 144 999 

Capital expenditure (net of capital grants) –49 893 –49 571 

Free cash flow 75 132 95 428 

Proceeds from sale of fixed assets 12 795 15 417 

Acquisition of investments and intangible assets –10 983 –3 876 

As in the previous year the free cash flow derives mainly from operating 

activities. Mainly the reduction of current liabilities reduced 

it below the record level of the previous year. Additions and di- 

48 

the effect of improving significantly the Debt-Equity-Ratio and the 

Equity as % of Total Assets. This reduced debt burden and higher 

equity level equate to increased financial security and independence 

for Saurer. 

sposals of property, plant and equipment were slightly above those 

of the prior year. The acquisition of the New Castle Industries 

Group resulted in an increased use of funds for investments.

CONSOLIDATED FINANCIAL STATEMENTS.

Consolidated income statement for the years ended December 31, 

(EUR 000) Note* 2003 % 2002 % 

Sales 1 1 745 874 100.0 1 697 492 100.0 

Cost of goods sold –1 348 164 –77.2 –1 298 146 –76.5 

Gross profit 397 710 22.8 399 346 23.5 

Selling and distribution –112 602 –6.4 –129 781 –7.6 

Research and development –74 737 –4.3 –77 271 –4.6 

Administration and other 3 –123 353 –7.1 –122 941 –7.2 

Operating expenses 

Operating profit before sale of 

–310 692 –17.8 –329 993 –19.4 

discontinuing operations 4 87 018 5.0 69 353 4.1 

Profit on sale of discontinuing operations 2 988 – – – 

Operating profit 88 006 5.0 69 353 4.1 

Financial income (expense) 5 –17 771 –1.0 –17 983 –1.1 

Profit before income taxes 70 235 4.0 51 370 3.0 

Income taxes 6 –21 716 –1.2 –16 758 –0.9 

Profit before minorities 48 519 2.8 34 612 2.1 

Minority interests 16 –1 319 –0.1 –1 146 –0.1 

Net profit 47 200 2.7 33 466 2.0 

* For details see the notes to the consolidated financial statements, pages 58–72. These are an integral part of the consolidated financial statements. 

Earnings per share (EUR) 2003 2002 

Basic earnings per share 3.33 2.37 

Diluted earnings per share 3.32 2.37 

See note 7, page 62. 

51

Consolidated balance sheet as at December 31, 

Assets 

(EUR 000) Note* 2003 % 2002 % 

Cash 105 453 91 092 

Marketable securities 4 333 9 595 

Liquid assets 109 786 8.8 100 687 7.7 

Accounts receivable, trade 8 276 170 281 409 

Inventories 9 207 211 218 969 

Current income taxes 5 660 2 496 

Prepayments and accrued income 5 113 4 655 

Other receivables 67 120 62 521 

Current assets 671 060 53.6 670 737 51.6 

Financial assets 10 16 118 20 969 

Deferred income taxes 6 48 919 50 342 

Property, plant and equipment 11 395 228 430 409 

Intangible assets 12 119 654 128 643 

Non-current assets 579 919 46.4 630 363 48.4 

Total assets 1 250 979 100.0 1 301 100 100.0 

Liabilities and shareholders’ equity 

Short-term debt 13 283 18 304 

Short-term portion of long-term debt 13 16 510 26 424 

Accounts payable, trade 159 124 165 025 

Accruals and deferred income 83 223 87 450 

Current income taxes 19 506 9 276 

Short-term provisions 14 85 213 88 424 

Other current liabilities 70 329 89 228 

Current liabilities 434 188 34.7 484 131 37.2 

Long-term debt 13 125 370 161 746 

Long-term provisions 14 13 093 18 733 

Deferred income taxes 6 24 970 14 288 

Long-term employee benefits 15 178 056 175 091 

Other non-current liabilities 4 711 14 071 

Non-current liabilities 346 200 27.7 383 929 29.5 

Total liabilities 780 388 62.4 868 060 66.7 

Minority interests 16 2 720 0.2 2 445 0.2 

Share capital 17 110 228 119 813 

Group reserves 374 041 362 699 

Treasury shares –63 598 –85 383 

Net profit for the period 47 200 33 466 

Shareholders’ equity 467 871 37.4 430 595 33.1 

Total liabilities and shareholders’ equity 1 250 979 100.0 1 301 100 100.0 

* For details see the notes to the consolidated financial statements, pages 58–72. These are an integral part of the consolidated financial statements. 

52

Consolidated cash flow statement for the years ended December 31, 

(EUR 000) 

Cash flow from operating activities 

Note* 2003 2002 

Profit before taxes 70 235 51 370 


Changes in net working capital 18 –26 007 16 235 

Other non-cash items 3 041 –5 850 

Interest (income) expense (net) 14 818 17 280 

Interest received 2 417 4 281 

Interest paid –6 890 –12 520 

Income taxes paid –10 778 –5 141 


Cash flow from investing activities 

Acquisition of investments (net) 19 –10 453 –1 538 

Loans (granted) repaid (net) –1 453 2 069 

Capital expenditure for tangible fixed assets –50 913 –49 571 

Capital expenditure for intangible assets –530 –2 338 

Capital grants received 1 020 – 

Sale (purchase) of marketable securities (net) 4 824 –3 984 

Proceeds from sale of fixed assets 12 795 15 417 

Cash flow from investing activities –44 710 –39 945 

Cash flow from financing activities 

Increase (decrease) in debt financing (net) –42 996 –103 541 

Repurchase of 21 ⁄4% convertible bond 2000–2005 –16 216 –29 246 

Dividends and net capital repayments to minority shareholders –348 –2 327 

Sale (purchase) of treasury shares (net) 8 207 –4 909 

Capital repayment to the shareholders of Saurer Ltd. –9 350 – 

Cash flow from financing activities –60 703 –140 023 

Foreign exchange differences on cash –5 251 –2 455 

Net increase (decrease) in cash 14 361 –37 424 

Cash as at January 1 91 092 128 516 

Cash as at December 31 105 453 91 092 

* For details see notes to the consolidated financial statements, pages 58–72. These are an integral part of the consolidated financial statements. 

53

Consolidated statement of shareholders’ equity 

Foreign Retained 

Capital currency earnings and 

Share and legal translation Hedging Treasury net income 

(EUR 000) 

Balance as at 1.1.2002 as 

capital reserves reserve reserve shares for the period Total 

originally reported 

Adjustment for goodwill 

119 813 129 543 22 954 –1 367 –80 681 231 526 421 788 

(IAS 21 revised) –4 794 –2 182 –6 976 

Balance as at 1.1.2002 restated 119 813 129 543 18 160 –1 367 –80 681 229 344 414 812 

Net profit 33 466 33 466 

21 ⁄4% convertible bond 2000–2005 –3 135 3 135 – 

Movements in cash flow hedges 2 956 2 956 

Foreign currency translation –15 730 –15 730 

Change in treasury shares 7 021 177 –4 702 –7 405 –4 909 

Balance as at 31.12.2002 119 813 133 429 2 607 1 589 –85 383 258 540 430 595 

Capital repayment –9 585 –519 754 –9 350 

Net profit 47 200 47 200 

21 ⁄4% convertible bond 2000–2005 –1 544 1 544 – 

Movements in cash flow hedges 4 887 4 887 

Foreign currency translation –13 716 48 –13 668 

Change in treasury shares –21 330 1 025 21 031 7 481 8 207 

Balance as at 31.12.2003 110 228 110 555 –10 603 6 524 –63 598 314 765 467 871 

In 2003 the carrying value of goodwill has been adjusted in accordance 

with IAS 21 (revised), which allows goodwill to be translated 

to the group's reporting currency at current exchange rates. 

Previously, goodwill was translated and fixed in the group’s reporting 

currency at the date of acquisition of foreign subsidiaries. 

From January 1, 2005 this accounting treatment will no longer be 

permissible under IAS 21 (revised). This change has been shown as 

an adjustment to the value of shareholders’ equity as at January 

1, 2002, and all comparative figures have been adjusted accordingly. 

The total amounts booked to equity in 2003 excluding capital 

transactions and profit for the period were EUR –574 (2002: 

EUR –17 683). 

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 

54 

regulations, before they are at the disposal of the shareholders’ 

meeting of Saurer Ltd. 

Foreign currency translation adjustments arise from changes in the 

exchange rates used to translate the opening equity and net result 

of group companies 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 movement in the hedging reserve are shown in Note 23. 

For share statistics see page 111. 

For details of treasury share transactions see Note 17.

Organization and business activity 

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 of Transmission Systems the development, 

manufacture and sale of transmission systems. The Surface Technology 

Division is to be divested in the near future and for that reason 

is shown as Discontinuing Operations. Saurer operates worldwide. 

Organizational changes within the scope of consolidation 

During the year under review the minority shareholders of Barmag 

AG, Remscheid, Germany were bought out. Subsequently Barmag 

AG and the following companies were merged into W. Schlafhorst 

AG & Co, which was renamed to Saurer GmbH & Co KG: Neumag 

GmbH & Co KG, PARSYS Produktionstechnik GmbH, Saurer-Allma 

GmbH, Schlafhorst Autocoro GmbH, Schlafhorst Customer Support 

GmbH, Schlafhorst Winding Systems GmbH, Volkmann GmbH and 

Zinser Textilmaschinen GmbH. As of August 16, 2003 the New 

Castle Group, USA, was acquired. S+G Industrieschreinerei GmbH, 

Germany was sold effective September 30, 2003. The activities of 

Xaloy Olten, Switzerland, and Xaloy Czech s.r.o., Czech Republic, 

were sold on November 30, 2003. 

Principles for the consolidated financial statements 

General principles and accounting standards The consolidated 

financial statements are based on the financial statements of 

the individual group companies which have been drawn up in accordance 

with standardized accounting principles. The accounts 

are, in general, based on the historical cost convention. The consolidated 

financial statements and the individual financial statements 

of all companies are prepared in accordance with International 

Financial Reporting Standards, including International 

Accounting Standards and Interpretations issued by the International 

Accounting Standards Board (IASB). 

Presentation For the first time in 2003 the consolidated financial 

statements are presented in Euros. This reflects the fact that the 

Euro is the functional currency of the major part of Saurer’s business. 

Change in accounting principles In 2003 the carrying value of 

goodwill has been adjusted in accordance with IAS 21 (revised) 

which allows goodwill to be translated to the group’s reporting 

currency at current exchange rates. Previously, goodwill was translated 

and fixed in the group’s reporting currency at the date of 

acquisition of foreign subsidiaries. From January 1, 2005 this 

accounting treatment will no longer be permissible under IAS 21 

(revised). This change has been shown as an adjustment to the 

value of shareholders’ equity as at January 1, 2002, and all comparative 

figures have been adjusted accordingly. 

Principles of consolidation 

Scope of consolidation The consolidated financial statements 

of Saurer Ltd. include all subsidiaries in which Saurer Ltd. directly 

Accounting principles 

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 interests of third-party minority shareholders are shown separately 

in the balance sheet and income statement. 

Capital consolidation The capital consolidation is based on the Anglo-Saxon 

purchase method. 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 sales 

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 currency translation Business transactions in foreign 

currencies are translated into the respective local 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 subsidiaries 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. Any difference arising thereon is not 

included in the income statement, but 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. 

Financial risk management Saurer’s international activities expose 

it to a variety of market risks, including currency risks. An overall 

risk management program coordinated by central corporate treasury 

staff seeks to minimize the effects of unpredictable financial 

markets on the financial results of the group. 

Currency risks, which due to the group’s activities mainly arise in 

U.S. Dollars, are hedged by using forward contracts. 

Foreign currency risks which arise from the translation of income 

statement and balance sheet items of foreign consolidated companies 

are generally not hedged. 

55


Interest risks The group’s liquid assets are invested on a shortterm 

basis. The group’s income and operating cash flows are substantially 

independent of changes in market interest, and interest 

exposures are generally not hedged. 

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. 

Commodity price risks The price risks related to commodities 

used in Saurer products are low. 

Composition and valuation of balance sheet items 

Cash includes cash in hand, balances in postal and bank accounts, 

as well as short-term money market funds. 

Marketable securities are shown at year-end market value. 

Changes in value are included in the income statement. 

Accounts receivable, trade and other receivables are included at 

face value, less specific provisions where appropriate. 

Inventories Raw materials are valued at the lower of cost and 

market, using the FIFO or 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. 

Financial assets are included at cost less provisions for permanent 

impairment of value. 

Financial Instruments Derivative financial instruments are 

recorded at cost and are subsequently adjusted to fair value. With 

the exception of financial instruments which hedge a forecasted 

transaction (cash flow hedges), 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 exclusively for cash flow hedges. 

These are used to secure 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 

56 

have been recorded in equity are included as a charge or credit to 

income when the forecasted transaction is recognized. 

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. Depreciation 

is charged on a straight-line basis over the following periods: 

Furniture, fittings and equipment 

Years 

5–12 

IT, office equipment 3–7 

Vehicles, tools 4–6 

Machinery 6–10 

Buildings : – exterior constructions 30–60 

– interior constructions 12–25 

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. 

Leased equipment Property, plant and equipment financed 

through long-term financial leasing contracts, and for which the 

company bears the major risks (financial leasing), is capitalized and 

depreciated like other fixed assets. The present value of the corresponding 

lease obligations is included as a liability under longterm 

liabilities. 

Rental costs for short-term operational 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 is the excess of the acquisition price of investments over 

the related equity value at the date of acquisition and is amortized 

to the income statement over a maximum period of 20 years. 

Amortization periods in excess of 5 years are only used in the case 

of strategic acquisitions where a sustainable expansion of market 

share can be expected. 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 into Euros at the 

closing rate for the year. The amortization of goodwill is included 

in administration and other expenses. 

The carrying value of goodwill is reviewed at least annually for all 

investments and, if a risk of impairment is seen, a detailed valuation 

is performed using Discounted Cash Flow analysis over a fiveyear 

period. If required, adjustments are then made to reduce the 

carrying values of goodwill for the investments affected. 

Where an acquisition gives rise to negative goodwill this is released 

to income over a period calculated to match any related costs. 

The release to income is recorded together with goodwill amortization 

in administration and other expense. 

Patents, licenses and trademarks are capitalized at cost and are 

written off on a straight-line basis over their useful life, not exceeding 

10 years.

Provisions are set up for current legal and actual liabilities which 

are attributable to events in the past. The amount of the provisions 

is based on the expected use of funds for covering the liabilities. 

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 independently 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. 

The additional costs for early retirement and reduced working 

hours are provided for at the time of the respective agreement. 

Employee stock options are issued with exercise prices equivalent 

to market prices at the date of issue and therefore no charge 

is made to income at the date of issue. On the exercise of the option, 

the difference between the exercise and market prices is offset 

by an equivalent gain on the sale of treasury shares. 


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. 

Other assets and liabilities are reported at their nominal or 

market value. 

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 included. 

Income taxes Liabilities for taxes on income are calculated and 

provided for, irrespective of their maturity, on the basis of the 

expected 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 permissible. 

Tax effects from tax loss carry forwards 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. 

57

Notes to the consolidated financial statements 

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

1 Segment information 

Saurer Textile Solutions is active in the development and manufacture 

of yarn-making solutions for the natural and synthetic 

fiber industry; Transmission Systems is engaged in the development 

and manufacture of transmission systems for motor vehicles. 

Surface Technology is to be divested and is therefore shown 

as discontinuing operations. Saurer Textile Solutions includes real 

By division: 

58 

estate in Arbon, Switzerland, which was previously included in 

Corporate and Other. The prior year figures have been adjusted 

accordingly. The difference between the segment operating result 

and the net profit for the group is shown in the consolidated 

income statement. There are no significant sales transactions between 

the divisions. 

Saurer Textile Solutions 2003 % 2002 % 

Sales 1 275 371 100.0 1 211 521 100.0 


Research and development 66 310 5.2 69 517 5.7 

Capital expenditure for tangible fixed assets 26 869 26 222 


Segment assets (operating assets) 649 654 676 068 

Segment liabilities (operating liabilities) 310 613 330 321 

Transmission Systems 

Sales 363 009 100.0 380 172 100.0 







Discontinuing Operations (Surface Technology) 

Sales 107 494 100.0 105 799 100.0 

Operating profit (loss) 2 889 2.7 –4 006 –3.8 






Corporate and Other 

Operating profit (loss) –1 501 –247 

Capital expenditure for tangible fixed assets 148 15 

Depreciation and amortization 121 112 


Segment liabilities (operating liabilities) 3 338 3 145

By division (continued) 


Total Saurer 2003 % 2002 % 

Sales 1 745 874 100.0 1 697 492 100.0 





Segment assets (operating assets) 1 072 801 1 140 049 

Unallocated assets/eliminations 178 178 161 051 

Total assets 1 250 979 1 301 100 


Unallocated liabilities/eliminations 355 499 391 687 

Total liabilities 780 388 868 060 

By geographical region: 2003 2002 

Sales (by location of customer) 1 745 874 1 697 492 

Europe 519 951 589 496 

NAFTA 226 992 284 679 

South America 75 639 51 833 

Africa, Middle East 275 607 318 687 

Far East, Asia 647 685 452 797 


Europe 44 303 38 850 

NAFTA 2 131 2 998 

South America 61 62 

Africa, Middle East – – 

Far East, Asia 4 418 7 661 

Total Assets 1 250 979 1 301 100 

Europe 1 084 035 1 123 976 

NAFTA 106 198 121 617 

South America 2 125 2 167 

Africa, Middle East – – 

Far East, Asia 58 621 53 340 

59


2 Discontinuing Operations – Surface Technology 2003 2002 

Order income 113 790 109 365 

Sales 107 494 105 799 

Operating profit (loss) before sale of discontinuing operations 1 901 –4 006 

Profit on sale of discontinuing operations 988 – 

Operating profit (loss) 2 889 –4 006 

Financial income (expense) –889 –4 594 

Profit (loss) before taxes 2 000 –8 600 

Income taxes 283 2 943 

Net profit (loss) 2 283 –5 657 

Total assets 113 209 106 103 

Total liabilities 85 670 48 816 




Employees as at December 31 871 786 

By Resolution dated October 4, 2002, the Board of Directors of 

Saurer confirmed its intention to divest Surface Technology. Xaloy 

Europe was sold on November 30, 2003 and the remaining business 

activities are expected to be sold during 2004. 

3 Administration and other 2003 2002 

Administration and other includes the following items: 

Amortization of goodwill –7 566 –6 263 

Gain on sale of real estate 5 439 7 344 

Gain on sale of business, excluding discontinued operations 38 – 

Restructuring costs –27 516 –29 269 

4 Operating profit before sale of discontinuing operations 2003 2002 

The operating profit before sale of discontinuing operations is stated after deducting the following: 

Wages and salaries –385 694 –408 447 

Social expenses and other personnel expenses –106 382 –105 351 

Personnel expenses –492 076 –513 798 

Cost of materials –763 958 –706 225 

Depreciation and amortization –78 189 –79 344 

Payments made under operating leases –8 045 –7 848 

Rental expense – non-cancellable rental contracts –5 747 –6 201 

60 

The profit on sale of discontinuing operations had no material 

effect on the income taxes for the period.


5 Financial income (expense) 2003 2002 

Income (expense) from marketable securities 

Realized gains (losses) 175 136 

Unrealized gains (losses) –6 128 

Total income (expense) from marketable securities 169 264 

Interest expense from 21 ⁄ 4% convertible bond 2000–2005 (Note 13) –4 064 –5 498 

Interest expense from pension plans (Note 15) –8 174 –6 290 

Other interest expense –4 624 –9 755 

Interest income 2 044 4 263 

Income (expense) from investments 444 81 

Expenses from foreign exchange differences (net) –1 015 –4 270 

Gain (loss) on repurchases of convertible bond (Note 13) –533 3 285 

Other financial income (expense) net –2 018 –63 

Total financial income (expense) –17 771 –17 983 

Interest expense relating to the 21 ⁄ 4% convertible bond 2000– 

2005 is shown as for an equivalent loan without conversion rights, 

in accordance with IAS 32. The gain (loss) on repurchase of con- 

6 Income taxes 2003 2002 

Current income taxes –14 880 –15 318 

Deferred income taxes –6 836 –1 440 

Total income taxes –21 716 –16 758 

Using the maximum tax rate of 24.0% (2002: 24.2 %) at the company's 

headquarter location (Saurer Ltd., Arbon, Switzerland) applied 

to the profit before tax of EUR 70.2 million (2002: EUR 51.4 

vertible bond represents the difference between the liability value 

repurchased and the cash price paid (see details in Note 13). 

million), an expected tax charge of EUR 16.9 million (2002: EUR 

12.4 million) results. The effective tax charge differs from the 

expected tax charge for the following reasons: 

Profit before taxes 70 235 51 370 

Maximum tax rate 24.0% 24.2% 

Expected tax charge –16 856 –12 432 

Variance due to differing local tax rates –5 859 –4 897 

–22 715 –17 329 

Effect of expenses not accepted for tax purposes (including amortization of goodwill) –2 238 –9 122 

Prior year taxes –1 565 –1 374 

Effect of tax losses 2 950 17 440 

Effect of changes in tax rate –962 491 

Other influences 2 814 –6 864 

Effective tax charge –21 716 –16 758 

Effective tax rate 30.9% 32.6% 

61


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

31.12.03 31.12.02 

Tax Tax Tax Tax 

assets liabilities assets liabilities 

Assets 

Accounts receivable 2 598 1 252 2 347 2 677 

Inventories 4 449 694 5 716 1 300 

Financial assets 632 8 840 2 061 17 051 

Property, plant and equipment 10 383 39 448 9 599 35 322 

Intangible assets 

Liabilities 

52 323 222 45 524 – 

Accounts payable 1 656 59 488 – 

Other short-term liabilities 4 197 4 377 6 060 2 400 

Long-term provisions including pension liabilities 17 306 2 643 17 881 1 837 

Other long term liabilities 6 071 5 309 4 918 2 362 

Deferred taxes from timing differences 99 615 62 844 94 594 62 949 

Offset of deferred tax assets and liabilities –37 874 –37 874 –48 661 –48 661 

Net deferred taxes from timing differences 61 741 24 970 45 933 14 288 

Deferred tax assets deriving from tax loss carryforwards 39 872 – 57 933 – 

Valuation allowances –52 694 – –53 524 – 

Total deferred taxes 48 919 24 970 50 342 14 288 

As at December 31, 2003 the company had tax loss carryforwards 

totaling EUR 120 million (2002: EUR 165 million) 

with a tax value of EUR 40 million (2002: EUR 58 million). 

7 Earnings per share 2003 2002 

Net profit attributable to shareholders 47 200 33 466 

Average number of ordinary shares 15 430 000 15 430 000 

less: treasury shares (average) –1 271 127 –1 318 298 

Average number of shares in circulation 14 158 873 14 111 702 

Dilutive effect of employee stock options 63 470 37 696 

Dilutive effect of convertible bond 

Average number of shares outstanding 

– – 

for the calculation of diluted earnings 14 222 343 14 149 398 

Basic earnings per share (EUR) 3.33 2.37 

Diluted earnings per share (EUR) 3.32 2.37 

8 Accounts receivable, trade 31.12.03 31.12.02 

Total accounts receivable, trade 276 170 281 409 

of which bills of exchange 8 402 6 539 

62 

Of these, EUR 3 million expire by the year 2006 and a further 

EUR 3 million by the year 2010. The remaining EUR 114 

million may be utilized after 2010.


9 Inventories 31.12.03 31.12.02 

Raw materials 109 990 102 968 

Work in process 155 049 106 253 

Finished goods 68 672 81 766 

Total 333 711 290 987 

Customer payments on account –126 500 –72 018 

Total inventories (net) 207 211 218 969 

10 Financial assets 31.12.03 31.12.02 

Non-consolidated investments 3 099 4 036 

Loans 5 228 4 418 

Capitalized pension surplus (Note 15) 4 750 9 625 

Other financial assets 3 041 2 890 

Total financial assets 16 118 20 969 

11 Property, plant and equipment 2003 2002 

Land and Machinery and 

Prepayments, 

assets under 

buildings equipment construction Total Total 

Cost 

Balance as at January 1 439 749 883 472 13 268 1 336 489 1 414 152 

Additions 4 856 36 976 9 081 50 913 49 571 

Disposals –29 915 –73 469 – –103 384 –94 317 

Transfers – 13 146 –13 146 – – 

Change in scope of consolidation 4 733 –19 644 – –14 911 –2 990 

Foreign currency translation –13 499 –27 722 –425 –41 646 –29 927 

Balance as at December 31 405 924 812 759 8 778 1 227 461 1 336 489 

Accumulated depreciation 

Balance as at January 1 –231 625 –674 455 – –906 080 –935 740 

Depreciation –8 361 –61 412 – –69 773 –72 214 

Disposals 26 839 69 020 – 95 859 84 274 

Change in scope of consolidation – 20 998 – 20 998 321 

Foreign currency translation 7 602 19 161 – 26 763 17 279 

Balance as at December 31 –205 545 –626 688 – –832 233 –906 080 

Property, plant and equipment, net 

Balance as at January 1 208 124 209 017 13 268 430 409 478 412 

Balance as at December 31 200 379 186 071 8 778 395 228 430 409 

Value of leased assets 30 818 4 601 – 35 419 29 136 

Insured values 621 762 1 144 988 – 1 766 750 1 994 853 

Assets pledged as collateral 81 496 84 144 

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 estimate of their fair value. 

However, based on market estimates, the proceeds from the possible 

sale of these properties are expected to be in excess of their 

book values. 

63


12 Intangible assets 2003 2002 

Cost 

Goodwill Patents etc. Total Total 

Balance as at January 1 232 946 8 794 241 740 250 054 

Additions 1 869 530 2 399 660 

Disposals – –13 –13 –253 

Foreign currency translation –8 155 –836 –8 991 –8 721 

Balance as at December 31 226 660 8 475 235 135 241 740 

Accumulated amortization 

Balance as at January 1 –106 069 –5 203 –111 272 –107 124 

Amortization –9 001 –850 - 9 851 –10 139 

Disposals – 13 13 170 

Foreign currency translation 5 500 414 5 914 5 821 

Balance as at December 31 –109 570 –5 626 –115 196 –111 272 

Negative Goodwill – at cost 

Balance as at January 1 –7 459 –7 459 –7 826 

Arising on acquisition – – –159 

Foreign currency translation 533 533 526 

Balance as at December 31 –6 926 –6 926 –7 459 

Negative Goodwill – amortization 

Balance as at January 1 5 634 5 634 2 935 

Recognized as income in period 1 435 1 435 3 009 

Foreign currency translation –428 –428 –310 

Balance as at December 31 6 641 6 641 5 634 

Intangible assets, net 

Balance as at January 1 125 052 3 591 128 643 138 039 

Balance as at December 31 116 805 2 849 119 654 128 643 

The negative goodwill of EUR 7 459 arose on the acquisition of 

Graziano Trasmissioni CH Ltd. in 2001 and is being recognized as 

income over three years on a degressive scale. This will match the 

13 Debt 31.12.03 31.12.02 

Loans, mortgages and leasing liabilities secured over land and buildings 32 287 39 343 

Unsecured loans 24 775 44 346 

21 ⁄4% convertible bond 2000–2005 84 818 104 481 

Total long-term debt 141 880 188 170 

Short-term debt 283 18 304 

Total debt 142 163 206 474 

The book values of the assets pledged to secure the loans amount to EUR 81 496 (2002: EUR 84 144). 

64 

expected timing of costs required to restructure the company. The 

release to income is set off against goodwill amortization in other 

expense.


31.12.03 31.12.02 

Bank Finance Convertible 

Maturities of long-term debt 

Within 1 year 

loans Mortgages leases bond Total Total 

(short-term portion) 9 720 2 788 4 002 – 16 510 26 424 

1 to 2 years 5 671 320 3 977 84 818 94 786 17 103 

2 to 5 years 7 774 – 12 315 – 20 089 131 698 

After 5 years 1 610 – 8 885 – 10 495 12 945 

Total long-term portion 15 055 320 25 177 84 818 125 370 161 746 

Total long-term debt 24 775 3 108 29 179 84 818 141 880 188 170 

Short-term and long-term debt by currency 

EUR 51 906 73 053 

USD 173 14 600 

CHF 87 981 108 244 

Other currencies 2 103 10 577 

Total 142 163 206 474 

Conditions of the 21 ⁄4% convertible bond 2000-2005 with an original 

issued amount of CHF 230 million: 

Each bond with a nominal value of CHF 5 000.00 can be converted 

from June 26, 2000 up to maturity on June 26, 2005 or at an 

earlier repayment date, free of charge into 39.68254 registered 

shares of Saurer Ltd. with a nominal value of CHF 11.50 each. The 

conversion price is CHF 126.00 per registered share. For fulfillment 

of the conversion right 1 825 400 registered shares of Saurer Ltd. 

with a nominal value of CHF 11.50 each have been reserved from 

conditional capital (resolution of the General Meeting of Shareholders 

of May 17, 2000). In accordance with IAS 32 the conversion 

right is valued separately and reported in shareholders' equity. 

In subsequent periods the liability component continues to be 

presented on the amortized cost basis, until extinguished on conversion 

or maturity of the bond. The equity conversion component 

was determined on the issue of the bond and is not changed in 

subsequent periods. 

The convertible bond is reported as follows in the balance sheet: 2003 2002 

Valuation of the liability as at January 1 104 481 131 476 

Bond stock repurchased –15 683 –32 530 

Amortization of issue costs 714 739 

Interest expense (Note 5) 4 064 5 498 

Interest at 21 ⁄4% –2 144 –2 945 

Foreign currency translation –6 614 2 243 

Valuation of the liability as at December 31 84 818 104 481 

The market value of the convertible bond stock was 100.05% of 

the nominal value as at December 31, 2003 (2002: 97.75%). 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 2003, bond stock with a nominal value of CHF 25 000/ 

EUR 16 442 was repurchased (2002: CHF 50 720/EUR 34 572). The 

value of the conversion rights, shown separately in shareholders’ 

equity, was reduced in proportion to the nominal value of bond 

stock repurchased. The transaction resulted in a loss of EUR 533 

(2002: gain of EUR 3 285) (Note 5). The nominal value of the outstanding 

convertible bond at December 31, 2003 was CHF 138 100/ 

EUR 88 645 (2002: CHF 163 100/EUR 112 127). 

65


14 Provisions 2003 2002 

Warranty Restruccosts 

turing Other Total Total 

Short-term provisions 26 385 32 999 29 040 88 424 82 707 

Long-term provisions 2 725 3 395 12 613 18 733 20 745 

Balance as at January 1 29 110 36 394 41 653 107 157 103 452 

Charge to income 16 949 25 722 16 225 58 896 50 804 

Utilization –11 808 –24 558 –12 266 –48 632 –36 308 

Release to income 

Reclass within provisions and 

–2 801 –2 443 –4 678 –9 922 –11 971 

(to) from other liabilities – – 25 –9 384 –9 409 1 961 

Change in the scope of consolidation 270 982 – 1 252 – 

Foreign currency translation –449 –371 –216 –1 036 –781 

Balance as at December 31 31 271 35 701 31 334 98 306 107 157 

Short-term provisions 28 982 33 219 23 012 85 213 88 424 

Long-term provisions 2 289 2 482 8 322 13 093 18 733 

Short-term provisions are expected to be utilized during 2004. Long-term provisions are expected to be utilized as follows: 

1 to 2 years 1 345 1 638 2 042 5 025 10 280 

2 to 5 years 944 844 5 509 7 297 7 525 

After 5 years 771 771 928 

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 within Saurer 

Textile Solutions, and further restructuring measures were laun- 

15 Long-term employee benefits 31.12.03 31.12.02 

Retirement and other post-employment benefits 159 731 156 909 

Other long-term employee benefits 18 325 18 182 

Total long-term employee benefits 178 056 175 091 

Obligations for retirement and other post-employment benefits 

Present value of funded obligations 253 020 285 213 

Present value of unfunded obligations 125 085 111 537 

Fair value of plan assets –247 802 –276 030 

Underfunding net 130 303 120 720 

Unrealized actuarial gains 4 478 11 737 

Pension surplus not capitalized 20 200 14 827 

Under (over) funding recognized in the balance sheet 154 981 147 284 

thereof as long-term employment benefits 159 731 156 909 

thereof included in financial assets (note 10) –4 750 –9 625 

66 

ched during 2003. Restructuring projects are also in process in 

Transmission Systems and Surface Technology. The total cost of 

restructuring charged to the income statement amounts to 

EUR 27 516 (2002: EUR 29 269). 

Other provisions cover various risks in the normal course of business 

as well as risks in connection with divestments and legal 

claims.


Expense in income statement 2003 2002 

Current service cost 12 220 10 893 

Interest cost 17 997 18 508 

Expected net return on plan assets –11 749 –12 972 

Actuarial (gains) losses recognized in period 679 –469 

Employee contributions –1 344 –1 932 

Change in pension surplus not capitalized 672 2 415 

Total charged to income 18 475 16 443 

Service cost for defined contribution plans 944 1 332 

Actual return on plan assets 20 097 14 938 

Development of balance sheet obligations 2003 2002 

Balance as at January 1 156 909 130 267 

Transfer from other long-term employee benefits (“TFR”) – 30 375 

Curtailments and settlements – –7 240 

Total pension expense as above 18 475 16 443 

Employer’s contributions –5 833 –3 778 

Pensions paid from unfunded plans –9 854 –9 121 

Foreign currency translation 34 –37 

Balance as at December 31 159 731 156 909 

Assumptions used in actuarial calculations (weighted average) 

Discount rate 4.8% 4.7% 

Expected return on plan assets 4.6% 4.7% 

Future salary increases 2.6% 2.6% 

Future pension increases 1.3% 1.3% 

Other long-term employee benefits 2003 2002 


Transfer to post-employment benefits (“TFR”) – –30 375 

Service cost 8 545 5 229 

Benefits paid –6 315 –3 934 

Curtailments and settlements –1 930 – 

Reclassification from other liabilities 326 – 

Foreign currency translation –483 –880 


Pension costs are included with personnel costs in the relevant income 

statement captions. The interest cost from unfunded pension 

plans and certain funded pension plans is shown as a financial 

expense (Note 5). In 2002 the Italian accounting profession deter- 

mined that the ‘Trattamento di fine rapporto’ (“TFR”) – the staff 

leaving indemnity – should be treated as a post-employment 

benefit; it was therefore reclassified accordingly in that year. 

67


16 Minority interests 2003 2002 


Minority share of profit 1 319 1 146 

Dividends and net capital repayments –348 –2 328 

Other changes in structure –478 –6 624 

Foreign currency translation –218 –813 


Other changes in structure relate to the acquisition of minority 

shareholdings in the former Barmag AG as well as the sale and 

deconsolidation of S+G Industrieschreinerei GmbH. In 2002 

17 Consolidated share capital 31.12.03 31.12.02 

Share capital of Saurer Ltd. 110 228 119 813 

The share capital comprises 15 430 000 fully paid registered shares 

with a nominal value of CHF 11.50 (2002: CHF 12.50) each. The 

shares outstanding are entitled to one vote each. The share capital is 

translated into Euros at historical exchange rates. 

Details concerning the shareholders are shown in Section 1.2 on page 

88 of the Corporate Governance Report. 

Authorized Capital 

The Board of Directors is authorized to increase the share capital up 

to May 16, 2004 through the issue of a maximum of 3 000 000 fully 

paid up registered shares with a nominal value of CHF 11.50 each, up 

to the maximum amount of CHF 34 500 000. 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 shareholders 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 48 875 000 through the issue of 4 250 000 fully paid 

Purchase and sale of treasury shares 

Number of registered shares 

2003 2002 

Balance as at January 1 1 378 980 1 226 070 

Purchase 33 751 203 617 

Sale –297 870 –43 707 

Sale from employee option programs –3 000 –7 000 

Balance as at December 31 1 111 861 1 378 980 

Treasury shares are held by Saurer Ltd. and also by a subsidiary 

company. 464 120 treasury shares are reserved for employee stock 

68 

the textile operations in China were restructured, whereby 

joint venture projects were liquidated or converted to majority 

shareholdings through capital reduction. 

up registered shares with a nominal value of CHF 11.50 each, of which 

a) up to an amount of CHF 34 500 000, representing 3 000 000 registered 

shares with a nominal value of CHF 11.50 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 14 375 000, representing 1 250 000 

registered shares with a nominal value of CHF 11.50 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. 

option plans (see Note 20). Purchases and sales of treasury shares 

occurred at market prices.


18 Changes in net working capital 2003 2002 

(Increase)/decrease in accounts receivable, trade and other –3 333 –38 970 

(Increase)/decrease in inventories (net) 5 819 39 331 

(Decrease)/increase in accounts payable, trade and other –22 918 19 737 

Other changes in net working capital –5 575 –3 863 

Total changes in net working capital –26 007 16 235 

19 Acquisition/divestment of investments 

Acquisition of consolidated investments 

2003 2002 

Accounts receivable 3 179 – 

Inventories 1 736 – 

Property, plant and equipment 12 354 – 

Goodwill 1 869 – 

Other assets 2 268 – 

Current liabilities –3 433 – 

Non-current liabilities –2 376 – 

Minority shareholders’ interests 371 – 

Net assets acquired 15 968 – 

Other (payment installments/refunds for acquisitions made in previous years) 2 564 1 127 

Acquisition price 18 532 1 127 

Paid in the year under review –18 532 –1 127 

Less cash acquired – – 

Cash flow from acquisition of consolidated investments –18 532 –1 127 

Cash flow from acquisition of non-consolidated investments –686 –675 

Cash flow from acquisition of investments –19 218 –1 802 

Divestment of consolidated investments 

Selling price 9 650 – 

Received in the year under review 7 911 – 

Less cash divested –446 – 

Cash flow from divestment of consolidated investments 7 465 – 

Cash flow from divestment of non-consolidated investments 1 300 264 

Cash flow from divestment of investments 8 765 264 

Net cash flow from acquisition/divestment of investments –10 453 –1 538 

The net assets disposed of comprise the following: 

Cash 446 – 

Accounts receivable 1 487 – 

Inventories 2 424 – 

Property, plant and equipment 6 267 – 

Other assets (including intercompany accounts of Saurer settled from proceeds) 7 939 – 

Current liabilities –9 832 – 

Minority shareholders’ interests –107 – 

Net assets divested 8 624 – 

In 2003 Saurer acquired the New Castle Group in the USA and bought 

out the remaining minority shareholders of Barmag AG, Germany, as 

well as selling Xaloy Europe (the operations of Xaloy in Olten, Switzerland 

and Xaloy Czech s.r.o., Czech Republic) and a 51% holding in 

S+G Industrieschreinerei GmbH, Germany. In addition, a further in- 

stallment was paid for Graziano Trasmissioni CH Ltd (UK) which was 

acquired in 2001. In 2002 a refund was received in respect of the 

DEMM acquisition, and a payment was made for the Graziano 

Trasmissioni CH Ltd. (UK) acquisition. 

69


20 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, 2003 the total number of treasury 

shares reserved for this purpose was 464 120. The conditional 

capital, which is also available for this program (Note 17), has not 

been used to date. The options granted as at December 31, 2003 

have exercise prices between CHF 23.25 und CHF 75.60. The 

At December 31, 2003 the following options were outstanding: 

70 

Year Exercise Senior Board of 

Number of Options granted Price CHF1) Employees2) Management2) Directors2) Total 

Options held 2003 52.25 92 300 30 500 18 000 140 800 

2002 23.25 50 500 45 500 37 000 133 000 

2000 75.60 8 000 33 000 33 500 74 500 

1999 73.50 29 600 41 000 37 500 108 100 

1997 49.50 1 000 – 2 220 3 220 

Total number of 

1994 36.50 4 500 – – 4 500 

options outstanding 185 900 150 000 128 220 464 120 

1) Exercise prices have been and will be adjusted over the years parallel to changes in nominal value of the stock (dilution protection). 

2) Including former members and employees. 

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

exercise prices correspond to the market prices at the time of 

issue. They are not adjusted (no repricing), except for reductions 

equal to the reductions of the nominal share value (dilution 

protection). The options are blocked for between 2 and 5 years 

and are valid for 5 to 6 years, except for 7 720 options that were 

issued before 1998. 

Senior Board of 

Employees1) Management1) Directors1) Total 

Options outstanding as at 1.1.2002 190 730 148 500 116 000 455 230 

Options granted 77 500 45 500 27 000 150 000 

Options exercised – –7 000 – –7 000 

Options expired –51 180 –61 500 –50 000 –162 680 

Options outstanding as at 31.12 2002 217 050 125 500 93 000 435 550 

Transfer between categories –23 500 – 23 500 – 

Options granted 92 300 30 500 – 122 800 

Options granted against payment3) – – 18 000 18 000 

Options exercised – –3 000 – –3 000 

Options expired –99 950 –3 000 –6 280 –109 230 

Options outstanding as at 31.12.2003 185 900 150 000 128 220 464 120 

Value of options granted in 2002 (EUR 000) 2) 232 136 81 449 

Value of options granted in 2003 (EUR 000) 3) 662 218 39 919 

Net earnings from exercising options in 2002 (EUR 000) 4) – 44 – 44 

Net earnings from exercising options in 2003 (EUR 000) 4) – 39 – 39 

1) Including former members and employees. 

2) Valued with Black-Scholes option pricing model at CHF 4.39. Options were issued on February 8, 2002 with an exercise price of CHF 24.25. 

3) Valued with Black-Scholes option pricing model at CHF 10.90. Options were issued on November 20, 2003 with an exercise price of CHF 52.25. The Board 

of Directors acquired each option for CHF 7.60 cash payment (Black-Scholes minus a deduction for non-tradability of options). 

4) Net earnings for the recipient: market value minus exercise price minus transaction fees.

21 Related parties 


In the years 2003 and 2002 there were no transactions or balances with related parties, except as noted in Section 5 on pages 99 to 102 

of the Corporate Governance Report. 

22 Contingent liabilities 31.12.03 31.12.02 

Discounted notes 317 250 

Guarantees in favor of third parties 9 964 13 534 

Others 990 1 054 

Total contingent liabilities 11 271 14 838 

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 

23 Financial instruments 

At December 31 the following types of financial instruments were held: 

involved in any litigation and is not aware of any pending litigation 

which could have a material impact on the consolidated financial 

statements. 

2003 2002 

Currency related Contract Positive Negative Contract Positive Negative 

instruments 

Forward foreign 

amount fair values fair values amount fair values fair values 

exchange rate contracts 

Over the counter 

146 931 10 691 –345 73 884 3 908 –159 

currency options 13 478 – –13 2 578 – –74 

Cross currency swaps 

Total of currency 

9 286 – –86 8 254 – –439 

related instruments 169 695 10 691 –444 84 716 3 908 –672 

Interest rate swaps 29 029 50 –601 – – – 

The positive and negative fair values are included in the balance 

sheet in other receivables and payables respectively. 

All of the currency related instruments mature within one year. 

Interest rate swaps with a contract amount of approximately 

EUR 25 million in connection with a sale and leaseback transaction 

run until 2010. The contract amount indicates the volume of 

business outstanding at the balance sheet date and does not 

represent amounts at risk. 

The table below shows the movements in the hedging reserve in shareholders’ equity in respect of cash flow hedges: 

2003 2002 

Balance as at January 1 1 589 –1 367 

Changes in fair value 9 936 2 707 

Realized gains or losses transferred to the income statement –2 707 1 367 

Deferred tax effect –2 342 –1 118 

Foreign currency translation 48 – 


71


24 Other financial obligations 

As at December 31, 2003 obligations for future capital expenditure amounted to EUR 5 137 (2002: EUR 12 571). 

72 

Due within: Due after 

Future obligations from: 1 year 2–5 years 5 years 

Operational leasing 5 626 4 639 35 

Rental contracts 5 035 13 574 5 558 

Total other financial obligations 10 661 18 213 5 593 

25 Events subsequent to the balance sheet date 

As of February 2, 2004 the group acquired M&J Fibretech A/S, 

Denmark. The remaining companies in the Xaloy Group in North 

America and Asia were sold effective March 8, 2004. No other 

events occurred between the balance sheet date and the date of 

this report which could have a significant impact on the consolidated 

financial statements for 2003. 

26 Currency rates applied 2003 2002 

Income Balance Income Balance 

Currency statement sheet statement sheet 

1 CHF 0.66 0.64 0.68 0.69 

1 USD 0.88 0.79 1.06 0.95 

1 GBP 1.44 1.42 1.59 1.53 

1 CNY 0.11 0.10 0.13 0.12 

These financial statements were authorized for issue by the Board of Directors of Saurer Ltd. on March 10, 2004. A resolution to 

approve the financial statements will be proposed at the General Meeting of Shareholders on May 13, 2004.

Share % share Consol- 

Company Location Currency capital holding idation Function 

Group 

Principal companies and investments 

Saurer AG Arbon, CH CHF 177 445 000 C 

Aktiengesellschaft Adolph Saurer Arbon, CH CHF 10 000 000 100 C 

S.B. Holding, Inc. Panama, Rep. 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, USA USD 5 058 000 100 C 

SAC Saurer Automotive Components BV 

Saurer Textile Solutions 

Rotterdam, NL EUR 11 344 505 100 C 

Barmag Beijing Machinery Ltd. Beijing, China CNY 6 619 000 60 C 

Barmag do Brasil Ltda. Sao Leopoldo, Brazil BRL 18 585 000 99 C 

Barmag Far East Ltd. Hong Kong, HK HKD 100 000 100 C 

Barmag India (Private) Ltd. Mumbai, India INR 50 000 000 100 C 

Barmag Textile Machinery (Wuxi) Co. Ltd. Wuxi, China CNY 58 059 000 100 C 

Barmag Textile Machinery Suzhou Co. Ltd. Suzhou, China CNY 17 452 000 100 C 

Barmag-Spinnzwirn GmbH Chemnitz, D DEM 4 000 000 100 C 

Melco Industries, Inc. Denver, CO, USA USD 2 407 000 100 C 

Saurer (Japan) Co. Ltd. Osaka, Japan JPY 30 000 000 83 C 

Saurer Czech a.s. Cerveny-Kostelec, ´ 

CZ CZK 127 074 000 96 C 

Saurer Hamel AG Arbon, CH CHF 14 160 000 100 C 

Saurer, Inc. Charlotte, NC, USA USD 3 000 000 100 C 

Saurer Textile Systems Far East Ltd. Hong Kong, HK HKD 250 000 100 C 

Saurer Twisting Systems (Suzhou) Co. Ltd. Suzhou, China CNY 14 906 000 100 C 

Saurer Beteiligungs AG Mönchengladbach, D EUR 250 000 49 P 

Saurer GmbH & Co KG Mönchengladbach, D EUR 41 000 000 100 C 

Saurer Verwaltungs GmbH Mönchengladbach, D EUR 250 000 49 P 

Schlafhorst Asia Ltd. Hong Kong, HK HKD 275 000 100 C 

Schlafhorst Electronics GmbH Mönchengladbach, D EUR 1 050 000 51 C 

Texparts GmbH Fellbach, D DEM 50 000 100 C 

W. Reiners Verwaltungs GmbH 


Mönchengladbach, D DEM 75 000 000 100 C 

APRILIA Ingranaggi S.p.A. Aprilia, I EUR 1 500 000 100 C 

DEMM Officine Meccaniche S.p.A. Porretta Terme, I EUR 4 650 000 100 C 

Graziano Trasmissioni CH Ltd. Doncaster, UK GBP 40 000 100 C 

Graziano Trasmissioni India Ltd. New Dehli, India INR 280 000 000 100 C 

Graziano Trasmissioni North America, Inc. Duluth, GA, USA USD 1 100 C 

Graziano Trasmissioni S.p.A. Cascine Vica Rivoli, I EUR 44 300 000 100 C 

Graziano Trasmissioni UK Ltd. Cambridge, UK GBP 40 000 100 C 

I.T.T. S.r.l. Cervere, I EUR 2 600 000 100 C 

Surface Technology (Discontinuing operations) 

IonBond AG Olten Olten, CH CHF 3 000 000 100 C 

IonBond LLC Madison Heights, MI, USA USD 1 100 C 

IonBond Ltd. Consett, UK GBP 1 150 000 100 C 

New Castle Group New Castle, PA, USA USD 4 100 100 C 

Xaloy Asia (Thailand) Ltd. Chonburi, Thailand THB 100 000 000 100 C 

Xaloy, Inc. Pulaski, VA, USA USD 1 000 100 C 

Xaloy Japan KK 

1) Shares without par value. 

Consolidation method: 

Yokohama, Japan JPY 10 000 000 100 C 

C = Full consolidation Financial companies 

P = Proportional consolidation Services 

Research and development 

Production 

Marketing and sales 

73

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 51 to 73) of Saurer Ltd. for the year ended December 31, 2003. 

These consolidated financial statements are the responsibility of the board of directors. Our responsibility is to 

express an opinion on these consolidated financial statements, based on our audit. We confirm that we meet 

the legal requirements concerning professional qualification and independence. 

Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession 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 10, 2004 

74

MULTIPLE YEAR COMPARISON.

Multiple year comparison 

Income Statement (EUR 000) 2003 2002 2001 2000 1999 

Sales 

Natural fibers 732 519 774 181 730 552 768 999 574 134 

Synthetic fibers 542 852 437 340 458 849 294 932 – 

Saurer Textile Solutions 1 275 371 1 211 521 1 189 401 1 063 931 574 134 

Transmission Systems 363 009 380 172 282 208 213 684 169 473 

Discontinuing Operations – Surface Technology 107 494 105 799 117 115 143 064 119 194 

Other – – 4 188 4 851 4 608 

Total sales 1 745 874 1 697 492 1 592 912 1 425 530 867 409 

Gross profit 397 710 399 346 362 450 353 666 181 718 

Operating expenses before impairment charge 

and sale of discontinuing operations –310 692 –329 993 –347 426 –276 492 –217 208 

Impairment charge – – –50 838 – – 

Profit on sale of discontinuing operations 988 – – – – 

Operating profit (loss) 88 006 69 353 –35 814 77 174 –35 490 

of which Saurer Textile Solutions1) 59 100 37 215 – 58 170 47 211 –51 530 


Discontinuing Operations – 

27 518 36 391 30 844 25 119 15 232 

Surface Technology 2 889 –4 006 –8 197 5 786 2 774 

Net financial income (expense) –17 771 –17 983 –19 693 –17 464 3 223 

Profit (loss) before taxes 70 235 51 370 – 55 507 59 710 –32 267 

Income taxes –21 716 –16 758 5 316 –14 194 –11 684 

Minority interests –1 319 –1 146 –1 123 –1 046 –906 

Net profit (loss) 47 200 33 466 –51 314 44 470 –44 857 

EBITDA (operating profit before depreciation and amortization) 

Total 166 195 148 697 100 142 151 009 22 976 

of which Saurer Textile Solutions1) 96 298 79 115 40 962 90 043 –17 893 



57 420 62 308 52 007 41 917 28 345 

Surface Technology 13 857 7 409 5 658 19 270 13 855 

Depreciation and amortization 

Total 78 189 79 344 85 118 73 835 58 466 

as % of sales 4.5% 4.7% 5.3% 5.2% 6.7% 

of which Saurer Textile Solutions1) 37 198 41 900 48 294 42 832 33 637 



29 902 25 917 21 163 16 798 13 113 


Order intake, order backlog 

Order intake 1 709 435 1 791 418 1 440 566 1 521 522 886 891 

Order backlog 409 021 466 196 379 982 518 503 167 646 

Cash flow 

Net cash from operating activities 125 025 144 999 116 590 109 512 –9 091 

as % of sales 7.2% 8.5% 7.3% 7.7% –1.0% 

Capital expenditure 50 913 49 571 64 014 73 611 63 254 




20 138 19 916 29 255 31 088 20 839 


The years 1999 to 2002 are restated for the translation of goodwill amortization at current rather than fixed historical currency rates. 

1) From 2003 Saurer Textile Solutions includes real estate in Arbon, Switzerland, which was previously included in Corporate/Other. The year 2002 has been 

restated for ease of comparison. 

76

Balance sheet (EUR 000) 31.12.03 31.12.02 31.12.01 31.12.00 31.12.99 

Assets 

Liquid assets 109 786 100 687 133 998 86 895 158 483 

Accounts receivable, trade 276 170 281 409 261 315 279 588 195 862 

Inventories 207 211 218 969 244 498 230 593 180 749 

Prepayments, other receivables 77 893 69 672 54 805 48 840 32 856 

Current assets 671 060 670 737 694 616 645 916 567 950 

Financial assets, deferred taxes 65 037 71 311 75 321 55 836 24 848 

Property, plant and equipment 395 228 430 409 478 411 442 326 357 963 

Intangible assets 119 654 128 643 138 040 190 046 38 261 

Non-current assets 579 919 630 363 691 772 688 208 421 072 

Total assets 


1 250 979 1 301 100 1 386 388 1 334 124 989 022 

Short-term debt 16 793 44 728 149 390 87 524 96 481 

Accounts payable, trade 159 124 165 025 165 877 160 902 82 008 

Provisions, accruals and deferred income 168 436 175 874 166 328 169 025 123 223 

Other current liabilities 89 835 98 504 64 291 53 630 29 398 

Current liabilities 434 188 484 131 545 886 471 081 331 110 

Long-term debt 

Provisions, deferred taxes, 

125 370 161 746 192 605 188 612 137 115 

other non-current liabilities 220 830 222 183 221 996 193 404 108 434 

Non-current liabilities 346 200 383 929 414 601 382 016 245 549 

Total liabilities 780 388 868 060 960 487 853 097 576 659 

Minority interests 2 720 2 445 11 064 11 297 1 981 

Shareholders’ equity 467 871 430 595 414 837 469 730 410 382 

Total liabilities and shareholders’ equity 1 250 979 1 301 100 1 386 388 1 334 124 989 022 

Equity financing ratio 37.4% 33.1% 29.9% 35.2% 41.5% 

The years 1999 to 2002 are restated for the translation of goodwill at current rather than fixed historical currency rates. 

Employees (full time equivalents) 


Number of employees (year end) 10 286 10 760 11 520 11 219 7 774 

of which Saurer Textile Solutions 6 443 6 929 7 632 8 346 5 134 



2 951 3 021 3 006 1 826 1 581 

Surface Technology 871 786 857 1 025 1 041 

Europe 8 033 8 936 9 823 9 230 6 077 

of which Switzerland 334 437 522 546 534 

NAFTA 654 747 804 1 070 1 078 

Asia 1 531 1 015 831 858 619 

Rest of World 68 62 62 62 – 

Personnel expenses (EUR 000) 2003 2002 2001 2000 1999 

Wages and salaries 

Social security and 

385 694 408 447 417 037 365 849 268 434 

other personnel expenses 106 382 105 351 110 914 92 297 71 717 

Total 492 076 513 798 527 951 458 146 340 151 

77


Income Statement (CHF 000) 2003 2002 2001 2000 1999 

Sales 

Natural fibers 1 113 795 1 135 800 1 103 419 1 199 630 918 615 

Synthetic fibers 825 406 641 622 693 041 460 091 – 

Saurer Textile Solutions 1 939 201 1 777 422 1 796 460 1 659 721 918 615 

Transmission Systems 551 955 557 751 426 245 333 345 271 157 

Discontinuing Operations – Surface Technology 163 445 155 218 176 889 223 179 190 711 

Other – – 6 325 7 568 7 373 

Total sales 2 654 601 2 490 391 2 405 919 2 223 813 1 387 856 

Gross profit 604 718 585 882 547 441 551 715 290 748 

Operating expenses before impairment charge 

and sale of discontinuing operations –472 407 –484 136 –524 750 –431 324 –347 533 

Impairment charge – – –76 786 – – 

Profit on sale of discontinuing operations 1 502 – – – – 

Operating profit (loss) 133 813 101 746 –54 095 120 391 –56 785 

of which Saurer Textile Solutions1) 89 862 54 598 –87 860 73 649 –82 448 



41 841 53 392 46 587 39 186 24 371 

Surface Technology 4 393 –5 879 –12 381 9 026 4 439 

Net financial income (expense) –27 021 –26 381 –29 744 –27 243 5 156 

Profit (loss) before taxes 106 792 75 365 –83 839 93 148 –51 629 

Income taxes –33 019 –24 585 8 029 –22 143 –18 694 

Minority interests –2 006 –1 682 –1 696 –1 631 –1 450 

Net profit (loss) 71 767 49 098 –77 506 69 374 –71 773 

EBITDA (operating profit before depreciation and amortization) 

Total 252 699 218 151 151 252 235 573 36 760 

of which Saurer Textile Solutions1) 146 422 116 070 61 869 140 466 –28 629 



87 307 91 414 78 551 65 390 45 351 


Depreciation and amortization 

Total 118 886 116 405 128 561 115 182 93 545 

as % of sales 4.5% 4.7% 5.3% 5.2% 6.7% 




45 466 38 022 31 964 26 204 20 980 


Order intake, order backlog 

Order intake 2 599 196 2 628 189 2 175 818 2 373 558 1 419 026 

Order backlog 637 214 678 129 563 211 793 315 268 233 

Cash flow 

Net cash from operating activities 190 101 212 728 176 097 170 837 –14 545 

as % of sales 7.2% 8.5% 7.3% 7.7% –1.0% 

Capital expenditure 77 413 72 726 96 686 114 832 101 207 




30 620 29 219 44 186 48 497 33 343 


The years 1999 to 2002 are restated for the translation of goodwill amortization at current rather than fixed historical currency rates. 

1) From 2003 Saurer Textile Solutions includes real estate in Arbon, Switzerland, which was previously included in Corporate/Other. The year 2002 has been 

restated for ease of comparison. 

78


Balance sheet (CHF 000) 31.12.03 31.12.02 31.12.01 31.12.00 31.12.99 

Assets 

Liquid assets 171 036 146 459 198 613 132 950 253 572 

Accounts receivable, trade 430 245 409 338 387 323 427 772 313 379 

Inventories 322 814 318 512 362 396 352 810 289 198 

Prepayments, other receivables 121 350 101 346 81 232 74 726 52 570 

Current assets 1 045 445 975 655 1 029 564 988 258 908 719 

Financial assets, deferred taxes 101 321 103 730 111 641 85 430 39 756 

Property, plant and equipment 615 726 626 073 709 103 676 764 572 741 

Intangible assets 186 409 187 125 204 603 290 772 61 217 

Non-current assets 903 456 916 928 1 025 347 1 052 966 673 714 

Total assets 


1 948 901 1 892 583 2 054 911 2 041 224 1 582 433 

Short-term debt 26 162 65 062 221 427 133 913 154 369 

Accounts payable, trade 247 899 240 292 245 864 246 182 131 213 

Provisions, accruals and deferred income 262 406 269 319 246 532 258 610 197 157 

Other current liabilities 139 954 129 545 95 292 82 054 47 037 

Current liabilities 676 421 704 218 809 115 720 759 529 776 


Provisions, deferred taxes, 

195 314 235 274 285 481 288 579 219 384 

other non-current liabilities 344 031 323 187 329 044 295 910 173 495 

Non-current liabilities 539 345 558 461 614 525 584 489 392 879 

Total liabilities 1 215 766 1 262 679 1 423 640 1 305 248 922 655 

Minority interests 4 237 3 556 16 399 17 285 3 169 

Shareholders’ equity 728 898 626 348 614 872 718 691 656 609 

Total liabilities and shareholders’ equity 1 948 901 1 892 583 2 054 911 2 041 224 1 582 433 

Equity financing ratio 37.4% 33.1% 29.9% 35.2% 41.5% 

The years 1999 to 2002 are restated for the translation of goodwill at current rather than fixed historical currency rates. 

Employees (full time equivalents) 

Number of employees (year end) 10 286 10 760 11 520 11 219 7 774 

of which Saurer Textile Solutions 6 443 6 929 7 632 8 346 5 134 



2 951 3 021 3 006 1 826 1 581 

Surface Technology 871 786 857 1 025 1 041 

Europe 8 033 8 936 9 823 9 230 6 077 

of which Switzerland 334 437 522 546 534 

NAFTA 654 747 804 1 070 1 078 

Asia 1 531 1 015 831 858 619 

Rest of World 68 62 62 62 – 

Personnel expenses (CHF 000) 2003 2002 2001 2000 1999 

Wages and salaries 

Social security and 

586 448 599 230 629 889 570 720 429 495 

other personnel expenses 161 754 154 560 167 524 143 982 114 747 

Total 748 202 753 790 797 413 714 702 544 242 

79

FINANCIAL REPORT OF SAURER LTD.

Saurer Ltd. – Income statement for the years ended December 31, 

Revenues (CHF) Note* 2003 2002 

Revenues from investments 13 227 073 8 705 891 

Interest income 9 212 239 11 272 385 

Other income 1 9 712 030 5 050 047 

Taxes – 42 252 

Extraordinary income 2 1 437 845 – 

Total revenues 33 589 187 25 070 575 

Expenses 

Administration expense –2 096 361 –1 448 888 

Finance expense (including value adjustments) –1 085 208 –1 088 262 

Interest expense –6 068 996 –6 881 490 

Taxes –142 406 – 

Other expenses 3 –11 645 965 –590 177 

Total expenses –21 038 936 –10 008 817 

Net income 12 550 251 15 061 758 

* For details see notes to the financial statements, page 83. 

81

Saurer Ltd. – Balance sheet as at December 31, 

Assets (CHF) Note* 2003 2002 

Cash 10 182 208 3 409 096 

Marketable securities 

Current accounts receivable 

6 798 15 825 

Third parties 1 118 031 332 965 

Group companies 11 363 657 69 742 645 

Accrued income 1 694 377 4 133 440 

Current assets 

Loans 

24 365 071 77 633 971 

Third parties 211 420 211 420 

Group companies 

Investments 

271 310 797 203 693 056 


Non-current assets 937 667 818 860 476 693 

Total assets 962 032 889 938 110 664 


Short-term debt 

Third parties 910 734 77 341 


Short-term provisions 182 055 180 000 

Accruals and deferred income 1 696 662 10 845 562 

Current liabilities 


18 492 382 71 901 503 

21 ⁄ 4% convertible bond 2000–2005 138 100 000 163 100 000 


Long-term provisions 50 324 030 50 324 030 

Non-current liabilities 365 760 911 285 549 816 

Total liabilities 384 253 293 357 451 319 

Share capital 177 445 000 192 875 000 

General legal reserves 61 904 473 61 904 473 

Reserve for treasury shares 101 130 000 135 140 000 

Unappropriated retained earnings 237 300 123 190 739 872 

Shareholders’ equity 4 577 779 596 580 659 345 

Total liabilities and shareholders’ equity 962 032 889 938 110 664 

* For details see notes to the financial statements, page 83. 

82

Notes (CHF) 

Saurer Ltd. – Notes to the financial statements 

Explanation to the financial statements 

Saurer shareholders participate legally in Saurer Ltd., which controls the companies listed on page 73. 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. 

1 Other income 

Other income includes a gain of CHF 8.1 million from repurchasing the 21 ⁄4% convertible bond, which to a large extent was deferred 

in prior year. 

2 Extraordinary income 

A liquidation dividend of CHF 1.4 million was received from IBSI Progiciels & Systemes SA, France. This amount was previously written off. 

3 Other expenses 

Other expenses include foreign exchange losses in the amount of CHF 9.7 million on USD-denominated loans held with group companies 

as well as a loss of CHF 0.4 million from writing down an investment. 

4 Development of shareholders’ equity 

General Reserve for Unappropriated 

Share capital reserves treasury shares retained earnings Total 

Balance as at 1.1.2002 192 875 000 61 904 473 124 840 000 185 978 114 565 597 587 

Net income for the year 2002 15 061 758 15 061 758 

Transfer to reserve for treasury shares 10 300 000 –10 300 000 – 

Balance as at 31.12.2002 192 875 000 61 904 473 135 140 000 190 739 872 580 659 345 

Net income for the year 2003 12 550 251 12 550 251 

Capital repayment –15 430 000 –15 430 000 

Transfer from reserve for treasury shares –34 010 000 34 010 000 – 

Balance as at 31.12.2003 177 445 000 61 904 473 101 130 000 237 300 123 577 779 596 

5 Authorized and conditional capital 

See note 17 on page 68. 

6 Contingent liabilities 31.12.03 31.12.02 

Guarantees 

The guarantees are given in favor of Saurer subsidiary companies. 

564 489 000 447 811 000 

7 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 17 on page 68. 

8 Significant shareholders 

See section 1.2 on page 88 of the Corporate Governance Report. 

9 Investments 

See page 73. 

10 Convertible bond 

See Note 13 on pages 64 and 65. 

83

Saurer Ltd. – Proposal to the General Meeting of Shareholders 

Appropriation of retained earnings (CHF) 

Retained earnings brought forward 190 739 872 

Net income for the financial year 2003 12 550 251 

Transfer from reserve for treasury shares 34 010 000 

Unappropriated retained earnings 237 300 123 

The Board of Directors proposes to the General Meeting of Shareholders that the unappropriated retained earnings be carried forward 

to new account. 

84

Report of the statutory auditors 

to the general meeting of Saurer Ltd., Arbon 

As statutory auditors, we have audited the accounting records and the financial statements (income statement, 

balance sheet and notes on pages 81 to 84) of Saurer Ltd. for the year ended December 31, 2003. 

These financial statements are the responsibility of the board of directors. Our responsibility is to express an opinion 

on these financial statements, based on our audit. We confirm that we meet the legal requirements concerning 

professional qualification and independence. 

Our audit was conducted in accordance with auditing standards promulgated by the Swiss profession, 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 overall financial statement presentation. We believe that our audit provides a reasonable 

basis for our opinion. 

In our opinion, the accounting records and the 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 10, 2004 

Saurer Ltd. – Report of the statutory auditors 

85

CORPORATE GOVERNANCE.

88 


H. Fischer* 

S. Kross, P. Stiefenhofer 

J. Röttgering 

Embroidery 

Dr. J. Henz 

Neumag 

Dr. C. Voigtländer 

Ringspinning Systems 

H. Kamp 

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. The Board of Directors intends to divest the Surface Technology 

activities and these are consequently disclosed separately as discontinuing operations. 

* Member of Senior Management. 

Rotor Spinning Systems 

J. Cundill 

Spinning Machines 

M. Stillger 

Texparts 

J. Steiger 

Saurer Ltd. 

Board of Directors 

CEO and Delegated Member of the Board of Directors 

H. Fischer* 

Finance, Controlling, CFO 

P. Stiefenhofer* 

Texturing Machines 

K. Karrasch 

Twisting 

Dr. D. Burger 

Winding Systems 

G. Küsters 

Corporate Communications 

Dr. C. Ackermann 

S. Lalive d’Epinay as from 

April 1, 2004 


Dr. M. Lamberto* 

G. Sarti, A. Prono, S. Puglisi, 

S. Piazza 

Corporate Development 

J. Steiger* 

IonBond 

Dr. M. Marchetti* 

R. Ahuja, R. Bonetti, 

E. Denisse, A. Stevenson 

The major companies of Saurer are set out in the list of principal companies and investments on page 73. 

1.2 Significant shareholders. At the end of 2003 the following shareholders were registered: 

Shareholders Number of shares Number of shareholders 

Individuals 11.45% 87.51% 

Corporate entities 46.78% 12.49% 

Treasury shares 7.21% – 

Shares in the process of transfer 34.57% – 

Internal Audit 

H. Beumer 

Surface Technology 

Xaloy 

W. Cox*

According to information available to the company, there is no shareholder with a beneficial ownership 

exceeding 5%. 

1.3 Cross-shareholdings. There are no cross-shareholdings. 

2. Capital structure. 

2.1 Capital. The issued share capital of Saurer Ltd. is CHF 177 445 000, comprising 15 430 000 fully paid 

registered shares with a nominal value of CHF 11.50 each. 

2.2 Authorized and conditional capital. Details of the authorized and conditional capital are set out in 

Note 17 on page 68 

2.3 Changes of capital. Information on movements in the capital structure for 2003 and 2002 are set 

out in the consolidated statement of shareholders’ equity on page 54. The movements for the year 2001 

are set out in the consolidated statement of shareholders’ equity on page 26 of the Annual Report 2002, 

which is available on the group’s homepage, www.saurer.com. 

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. 

2.5 Bonus certificates. Saurer Ltd. has not issued bonus certificates. 

2.6 Limitations on transferability and nominee registrations. There are no restrictions either for Swiss 

nor for non-Swiss investors with regard to registration in the share register. Similarly there are no limits 

89

egarding the number of shares eligible for voting rights to be registered. However, in accordance with 

the articles of incorporation, supported by the law, there is an obligation to report participations which 

exceed or fall below 5, 10, 20, 331 ⁄ 3, 50 and 662 ⁄ 3 percent respectively. In the event that a participation 

of 331 ⁄ 3 is attained, the holder of this participation is obliged to submit a public tender offer (according 

to the bylaws 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 transferred 

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 convertible bond are set out in Note 13 on pages 64 

and 65, and details of stock options are set out in Note 20 on page 70. 

3. Board of Directors. 

3.1 Members. The Board of Directors consists of a minimum of three and a maximum of nine members. 

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 important 

business connections with Saurer, except as noted in 5.1 below. None of the members of the 

Board exercises official functions or holds political posts. 

90

Prof. Dr. Giorgio Behr 

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. In 1984 he 

started his own consulting company Behr Deflandre & Snozzi BDS. In 1991 he took control of the Bircher 

Reglomat Group together with the management, and in 2001 of the Cellpack Group. 

Activities in governing and supervisory bodies: Professor at the University of St.Gall Business School. 

Member of the Board of the Hilti Group, Liechtenstein. Co-founder and member of the Board of the 

Bellevue Group. Member of the Supervisory Board of the European Financial Reporting Advisory Group 

EFRAG. Previously chairman of the standard setter Swiss GAAP FER and the group of experts in accounting 

of the SWX Swiss Exchange. 

Permanent management and consultancy functions for Swiss and foreign interest groups: None. 

Special Board assignments: Chairman. 

Ulrich Schmidt 

Education: Degree in Engineering, Technical University of Hannover. 

Professional background: Head of Development, Imperial-Werke Bünde (1967 to 1972). Head of Development, 

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 

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 ESEC SA, Schweiter AG, ISE AG. 


Special Board assignments: Delegated Member and Chief Executive Officer, Saurer (since April 1, 1996). 

Heinz Bachmann 

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 

91

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, Schneider Electric AG and Scholl-Then AG. Chairman Santex Group. Guest 

Professor, China Textile University, Shanghai. Academic Consultant of College of Textile Development 

Committee, China Textile University, Shanghai. 

Permanent management and consultancy functions for Swiss and foreign interest groups: Chairman, 

Swiss Association of Machinery Manufacturers (Textile Machinery Group), Swissmem. Board member of 

CEMATEX (European Committee of Textile Machinery Manufacturers). Chairman, Swiss Turkish Business 

Council. 

Alexis Fries 

Education: Degree in Physics, ETH Zurich. 

Professional background: From 1980 various positions with ABB (formerly BBC Brown Boveri) in Switzerland, 

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). 

Since 2001 President, ALSTOM Power, Paris, member of the Group Management of ALSTOM. 

Activities in governing and supervisory bodies: Member of the group management of ALSTOM. 


92 

1 2 3 4 5

6 7 

1. Prof. Dr. Giorgio Behr 

2. Ulrich Schmidt 

3. Heinrich Fischer 

4. Heinz Bachmann 

5. Alexis Fries 

6. Hans-Georg Härter 

7. Prof. Dr. Günther Schuh 

Hans-Georg Härter 

Education: Training in Mechanical Engineering, State Technician’s Certificate in machine design, construction 

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. 


Prof. Dr. Günther Schuh 

Education: Dr.-Ing., Dipl.-Wirt. Ing., RWTH Aachen. Postdoctoral lectureship qualification, University of 

St.Gall Business School. 

Professional background: Lectureships and professorships at University of St.Gall. From 2002 fully 

tenured 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. 

Activities in governing and supervisory bodies: Member of the Board of Gallus Holding AG, St.Gall, 

Deputy Chairman of Schott Zwiesel AG, Zwiesel, Member of the Board of Peiniger Röro GmbH, Gelsenkirchen. 

Chairman of the Board of Virtuelle Fabrik AG, St.Gall, and GPS AG, St.Gall. 

Permanent management and consultancy functions for Swiss and foreign interest groups: Designated 

Director of the Kühne Institute for Logistics at the University of St.Gall (HSG). 

Special Board assignments: Chairman of the Audit Committee. 

93

3.3 Cross-involvement. There is no cross-involvement among the Boards of Directors of listed companies. 

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 Shareholders 

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 Management 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. Normally 

this function is assigned to the CFO. 

94

3.5.2 Committees. 

Audit Committee. The members of the Audit Committee are: 

Prof. Dr. Günther Schuh Chairman 

Ulrich Schmidt Member 

Günther Schultz, external consultant, who is not a member of the Board of Directors, but has a contractual 

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 

functions to this committee. While the Committee of the Board is defined in the internal regulations, in 

the past it has not been appointed. 

Other Committees. Given the small size of the Board, important matters such as nomination, compensation 

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. 

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 usually 

for half a day. The Chairman of the Audit Committee reports about issues and decisions to the full 

Board at the next Board meeting. 

95

The CEO as Delegated Member regularly 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 

decisions 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 

Management. 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 a Committee 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 50 million has 

been delegated to the CEO, all other limits of delegation to the CEO are CHF 15 million or lower. 

3.7 Information and control instruments. Saurer’s reporting system uses professional 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 and capital spending. 

While a yearly budget is established and approved in the period of October to December of the prior 

year, updated year-end projections are reported four times a year. 

Specific treasury information is reported on a weekly and monthly basis. 

96

Business unit leaders report trends and developments in business, revenues, costs and financial positions 

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 must be reported, which 

allows the determination of asset turns and return on operating assets. 

In cases of specific initiatives, such as restructuring, the Board in the past has asked for special ad-hoc 

reporting. 

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 all business units, specific risk maps have been established. These risk maps are updated on a regular 

basis as a result of internal audits, risk reporting and periodic and systematic reviews with the management. 

The Head of Internal Audit and Risk Management, Hans Beumer reports directly to the Audit Committee 

of the Board of Directors. Mr. Beumer is an Economist, Dutch Certified Public Accountant and Certified 

Internal Auditor, who trained with Arthur Andersen. 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. 

4.1 Members. 

4. Senior Management. 

Name Nationality Function 

Heinrich Fischer Swiss CEO Saurer, Delegated Member of the Board of Directors, 

CEO Saurer Textile Solutions 

Peter Stiefenhofer Swiss CFO Saurer, CFO Saurer Textile Solutions 

Walter Cox USA CEO Xaloy Group 

Dr. Marcello Lamberto Italian CEO Transmission Systems 

Dr. Marco Marchetti Swiss Member of Senior Management of IonBond 

Josef Steiger Swiss Corporate Development Saurer, CEO Business Unit Texparts 

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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 

organizations 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. 

Heinrich Fischer See 3.2 above. 

Peter Stiefenhofer 

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., USA. 

Tasks previously carried out for Saurer: None. 

Walter Cox 

Education: B.A., Economics, DePauw University, USA. 

Professional background: Controller, Operations Manager, and Treasurer, Virginia Transformer Corporation, 

USA. Joined Xaloy, Inc. in 1983. CFO and later President of Xaloy, Inc. 

Tasks previously carried out for Saurer: President, Xaloy, Inc. 

Dr. Marcello Lamberto 

Education: Doctor in Mechanical Engineering from Politecnico 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). 


Dr. Marco Marchetti 

Education: Master’s Degree in Economics, University of Milan. PhD (Milan and Zurich). Advanced Management 

Program, Harvard Business School. Swiss Certified Public Accountant. 

Professional background: Audit Manager, Price Waterhouse. M&A Manager/Division Controller Rieter 

Automotive system. CFO, Rhodia Industrial Yarns. 


Josef Steiger 

Education: Degree in Engineering, ETH Zurich. Degree in Business Administration from HSG (University 

of St.Gall Business School). 

98

Professional background: Relationship Manager for Corporate finance for Swiss multinational companies 

at Chase Manhattan Bank, Zurich. Managing Director of Multirac Export AG, Baar. Head of Sales at 

Rieter AG, Winterthur. 

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. 

5. Compensation, shareholdings and loans to 

Directors and Senior Management. 

5.1 Content and method of compensation. For the Board of Directors, the following forms of compensation 

apply: 

> Board fees cash 

> Other cash compensations (expense allowances, company cars) 

> Consulting fees for special projects* 

> Saurer employee stock option program 

* Board members of Saurer have special experience in the areas of finance, process management, innovation 

management, Asian markets or textile and automotive industry. In order to make use of this 

experience beyond the limited framework of Board meetings, Saurer occasionally extends consulting and 

review assignments to Board members. These assignments in the past were limited to projects with an 

effort from 5 to 40 workdays. Consulting assignments are compensated with fees comparable to market. 

Board fees and other cash compensations have been decided by the full Board. 

The Chairman and the CEO decided the allocation of stock options to Board members. 

The following methods 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.) 

> Pension fund and other benefit allocations 

> Saurer employee stock option program 

99

Saurer does not issue stock to employees or Board members, unless acquired through the stock option 

programs. 

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. 

The basic philosophy of compensation for Senior Management can be summarized as follows: 

While the overall compensation over the midterm 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. 

All cash bonuses are related to elements of profit (operating profit, net income) and of assets and cash 

management (net debt, return on net operating assets, selected assets). 

Saurer measures operating profit and net operating assets for all business units on a worldwide consolidated 

basis, which allows compensation for key figures such as asset turns and returns on net operating 

assets. 

All senior managers and managers of business units have several yearly objectives with pre-defined 

ranges of cash bonuses. The minimum of cash bonuses is zero. 

Compensation and 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. 

100

5.2 Compensations in detail. 

Summary Table – 2003 Compensation. 

All amounts in EUR except where otherwise stated. 

Other cash 

Salaries & Cash payments Contribution 

Annual Compensation board fees bonuses 1) and fees 2) Total cash to pensions 

Non-Executive Members of the Board 403 288 – 194 458 597 746 – 

Members of the Senior Management 1 297 160 1 784 106 145 228 3 226 495 377 125 

Former Members of the Board 

Former Members of the 

– 693 252 371 877 1 065 129 – 

Senior Management 31 569 – – 31 569 14 924 

Individual with highest compensation3) 111 423 963 329 44 336 1 119 088 79 449 

Chairman of the Board 78 921 – 82 830 161 751 – 

Number of Number of Number of Number of Value of Value of Gain from 

options options options shares loans options options 

Long Term Compensation issued4) held5) exercised held6) outstanding issued4) exercised 

Non-Executive Directors of the Board 18 000 112 720 – 126 957 – 39 066 – 

Members of the Senior Management 30 500 124 000 3 000 1 000 – 218 645 39 701 

Former Members of the Board 

Former Members of the 

– 15 500 – 500 – – – 

Senior Management – 26 000 – – – – – 

Individual with highest compensation3) 3 000 7 000 – – – 21 506 – 

Chairman of the Board 8 000 35 000 – 126 357 – 17 363 – 

1) Cash bonuses paid in 2003 refer to the performance in the prior year. This also includes payments under the Graziano stock 

option plan. 

2) In 2003 no severance payments were included in this amount. 

The cash payments to a former member of the board are compensation for a board membership at a subsidiary, combined 

also with significant legal and tax consulting work on a success basis. The “cash bonus” stands for the gain from exercising 

stock options of the subsidiary. 

3) A member of the senior management (not the CEO). The bonus mainly originated from a long term incentive program. 

4) A total of 140 800 options were issued, of which 92 300 with a value of EUR 661 670 were allocated to non-executive 

employees. The share options granted provide the right to purchase one share per option. The closing price at the grant date 

was CHF 52.25 per share, the exercise price also CHF 52.25 per share. These options will vest 50% two years after the date 

of grant and 100% three years after grant. They will expire five years after grant on November 19, 2008. These options are not 

tradeable, and had a tax value as of date of grant of CHF 10.90 (EUR 7.17), calculated based on the Black-Scholes method. 

Strike prices have a dilution protection, they are adjusted in line with changes of the nominal value of the Saurer shares. 

101

5) Options held as of December 31, 2003. 

6) Saurer does not issue shares to board members or senior management, except if acquired under the stock option program. 

102 

Shares owned were therefore either acquired on the market or through exercising options. 

6. Shareholders’ participation rights. 

6.1 Voting rights restrictions and representation. Each issued registered share has one voting right. 

However, 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 another shareholder with a written proxy. 

Year issued Options held Exercise price (CHF) Duration (years) 

Non-Executive Directors of the Board 2003 18 000 52.25 5 

(Directors acquired the options issued in 2002 33 000 23.25 5 

2003 for CHF 7.60 per option) 2000 32 000 75.60 5 

1999 27 500 73.50 5 

1997 2 220 49.50 8 

Total 112 720 

Members of the Senior Management 2003 30 500 52.25 5 

2002 45 500 23.25 5 

2000 20 000 75.60 5 

1999 26 000 73.50 5 

1999 2 000 73.50 6 

Total 124 000 

Former Members of the Board 2002 4 000 23.25 5 

2000 1 500 75.60 5 

1999 10 000 73.50 5 

Total 15 500 

Former Members of the Senior Management 2000 13 000 75.60 5 

1999 13 000 73.50 5 

Total 26 000 

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 

present 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 thresholds, 

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 shareholders 

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 one million Swiss francs nominal value may ask for an item to 

be placed on the agenda. The request must be submitted in writing at least twenty days before the 

invitation to the meeting of shareholders is issued. 

103

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. 

No entries may be made in the share register and no share certificates may be issued from the date on 

which the invitation to the general meeting is issued until the day after the general meeting. 

104 

7. Changes of control and defence measures. 

7.1 Duty to make an offer. If an investor acquires a minimum of 331 ⁄ 3 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. Under a change of control provision, some executives have provisions 

whereby their normal contractual severance of 12 months is extended by 6 months. Severance of 

executives in Italy according to the law can be as long as 24 months. 

8. Auditors. 

8.1 Mandate and term of office. The group auditors PricewaterhouseCoopers AG, St.Gall, 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 

2003 amounts to EUR 1 340 000 (2002: EUR 1 278 000). The audit fees charged by other auditors for 

the financial year 2003 amount to EUR 115 000 (2002: EUR 93 000). 

8.3 Other fees. Fees charged by PricewaterhouseCoopers in respect of non-audit work for the financial 

year 2003 amount to EUR 237 000 (2002: EUR 151 000).

8.4 Supervisory and control instruments. The Board of Directors monitors the work and audit results 

of the external auditors through the Audit Committee (see 3. above), which meets at least twice a year 

with the external auditors. The Audit Committee further reviews the level of the external audit fees. Internal 

Audit also coordinates its work program with the external auditors. 

9. Information policy. 

Saurer publishes information on sales and order income on a quarterly basis and condensed interim 

financial information for the first half of the fiscal year. The financial information for the first half year is 

published in the form of a letter to shareholders, which is also available on the group’s homepage, 

www.saurer.com. The quarterly information on sales and order income is made available on the group’s 

homepage. The group also provides price sensitive information in accordance with the ad-hoc publicity 

requirements of the Listing Rules of the SWX Swiss Exchange. Details are available on the group’s 

homepage, www.saurer.com (under the Investor Relations and News Center pages). For information, 

please contact Simone Lalive d’Epinay, Corporate Communications, Phone +41 (0) 52 264 09 14, Fax 

+41 (0) 52 264 09 10. 

Important dates for 2004 are as follows: 

Publication of first quarter orders and sales: April 22, 2004 

Annual General Meeting of Shareholders: May 13, 2004 

Publication of half-year results: July 27, 2004 

Publication of third quarter orders and sales: October 18, 2004 

105

ADDRESSES WORLDWIDE.

Company Address Telephone/fax Internet/e-Mail Management 

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 26 48 

The Bank of Nova Scotia Building F +1 809 949 26 48 

P.O. Box 268, George Town T +377 97 70 40 43 

Grand Cayman, Cayman Island 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 


Addresses worldwide. 

Saurer GmbH & Co. KG Landgrafenstrasse 45 T +49 2161 28 0 www.textile.saurer.com 

D-41069 Mönchengladbach F +49 2161 28 26 45 info@textile.saurer.com 

P.O. Box 100435 

D-41004 Mönchengladbach 

Sales & Customer Support Jan Röttgering 

Technology & Logistics Stefan Kross 

Branch: 

Allma Leonhardstrasse 19 T +49 831 688 0 www.allma.saurer.com Dr. Dirk Burger 

D-87437 Kempten F +49 831 688 320 info@allma.saurer.com 

P.O. Box 2580 

D-87415 Kempten 

Barmag Leverkuser Strasse 65 T +49 2191 67 0 www.barmag.com Klaus Karrasch 

D-42897 Remscheid F +49 2191 67 1204 info@barmag.de Martin Stillger 

Neumag Christianstrasse 168–170 T +49 4321 305 0 www.neumag.de Dr. Carsten Voigtländer 

D-24536 Neumünster F +49 4321 305 212 sales@neumag.de 

Schlafhorst-Rotorspinning Blumenberger Strasse 143–145 T +49 2161 28 2880 www.schlafhorst.de John Cundill 

D-41061 Mönchengladbach F +49 2161 28 2803 info@schlafhorst.de 

P.O. Box 100435 

D-41004 Mönchengladbach 

Schlafhorst-Winding Carlstrasse 60 T +49 2161 28 0 www.schlafhorst.de Gerard Küsters 

D-52531 Übach-Palenberg F +49 2161 28 5302 info@schlafhorst.de 

P.O. Box 12 60 

D-52527 Übach-Palenberg 

Volkmann Weeserweg 60 T +49 2151 717 01 www.volkmann.saurer.com Dr. Dirk Burger 

D-47804 Krefeld F +49 2151 717 478 info@volkmann.saurer.com 

P.O. Box 102365 

D-47723 Krefeld 

Zinser Hans-Zinser-Strasse 1–3 T +49 7163 14 0 www.zinser-texma.com Heinz Wilhelm Kamp 

D-73061 Ebersbach F +49 7163 14 250 info@zinser-texma.com 

P.O. Box 1480 

D-73058 Ebersbach 

Brazil: 

Barmag do Brasil – Av. São Borja No. 2266 T +55 51 579 8500 www.barmag.com.br Volker Lübke 

Máquinas e Equipamentos Ltda. 93032-000 São Leopoldo – F +55 51 588 1363 barmag@barmag.com.br 

Rio Grande do Sul (RS), Brazil 

Schlafhorst do Brasil Ltda. Rua Domingos Afonso 460-térreo T +55 11 6101 2010 Günter Bammer 

Vila Santa Clara F +55 11 6916 6680 schlafhorst@schlafhorst.com.br 

BR-03161-090 São Paulo (SP), Brazil 

China: 

Barmag Beijing Machinery Co., Ltd. 18, Tian Shui Yuan Dong Jie T +86 01 6501 8821 www.barmag.com Dieter Abele 

Chaoyang District F +86 01 6501 9014 bbm@barmagpek.com.cn 

PRC-100026 Beijing, PR China 

Barmag Far East Ltd. Units 3806B–3807 T +852 2827 4314 www.barmag.com 

38th Floor, Wu Chung House F +852 2827 5250 barmaghk@netvigator.com Matthias Rudolph 

213 Queen’s Road East 

PRC-Wanchai, Hong Kong, PR China 

Barmag Textile Machinery 35, Baiyu Road T +86 512 67630 813 www.barmag.com Joachim Diezl 

(Suzhou) Co., Ltd. Suzhou Industrial Park F +86 512 67630 799 

PRC-215021 Suzhou, 

Jiangsu Province, PR China 

107



Barmag Textile Machinery Changjiang Nan Road 28–75 T +86 510 5342 721 www.barmag.com Tony Yung 

(Wuxi) Co., Ltd. Land Lord No. 100 F +86 510 5342 799 yung@btw.saurer.com 

PRC-214028 Wuxi New District 

Wuxi, Jiangsu Province, PR China 

Saurer Textile Systems Units 3806B–3807 T +852 286 603 08 Sindy Wong 

Far East Ltd. 38th Floor, Wu Chung House F +852 286 605 09 info@stsfe.saurer.com 

No. 213 Queen’s Road East 

Wanchai, Hong Kong, PR China 

Saurer Textile Systems 35, Baiyu Road T +86 512 6763 0086 Xu Linfeng 

(Suzhou) Co. Ltd. Suzhou Industrial Park F +86 512 6763 0586 info@suzhou.saurer.com 

PRC-215021 Suzhou, 

Jiangsu Province, PR China 

Schlafhorst Asia Ltd. Units 3806B–3807 T +852 2866 35 01 Heinz Wilhelm Kamp 

38th Floor, Wu Chung House F +852 2861 27 15 wscasia@compuserve.com Jan Röttgering 

No. 213 Queen’s Road East 

PRC-Wanchai, Hong Kong, PR China 

Czech Republic: 

Barmag Czech Republic s.r.o. U Veze 8 T +420 48 24 278 41 Herbert Rönchen 

CZ-46107 Liberec F +420 48 24 278 45 

Bratislavska 2939 T +420 519 36 37 22 

CZ-69002 Breclav 2 F +420 519 36 37 23 

Barmag Elektro CZ, spol. s.r.o. Obornik 31 T +420 583 412 836 www.barmag.com Josef Tempir 

CZ-78901 Zabreh F +420 583 412 838 barmag@raz-dva.cz 

Saurer Czech a.s. Lhota 261 T +420 491 469 200 www.czech.saurer.com Daniel Svrcina 

CZ-54941 Cerven´y-Kostelec F +420 491 469 502 info@czech.saurer.com 

Germany: 

Barmag-Spinnzwirn GmbH Zwickauer Strasse 247 T +49 371 2388 0 www.barmag-chemnitz.de Christoph Kückels 

D-09116 Chemnitz F +49 371 2388 349 info@barmag-chemnitz.de 

Schlafhorst Waldnieler Strasse 73 T +49 2161 28 0 www.schlafhorst.de Knut Richter 

Electronics GmbH D-41068 Mönchengladbach F +49 2161 28 3575 info@schlafhorst-electronics.de Manfred Tillmann 

India: 

Saurer India Pvt. Ltd. Empire Industries Complex T +91 22 56527900 Khurshed M. Thanawalla 

414, Senapati Bapat Marg, Lower Parel F +91 22 5652790 management@saurerindia.com 

Mumbai 400 013, India 

Schlafhorst Jyoti Studios Compound T +91 22 238 60 350 Soumitri Mohan Sen 

Marketing Company Ltd. K.B.A. Irani Bridge (Ken. Br.) F +91 22 238 78 439 smclbom@bom3.vsnl.net.in 

Mumbai 400 007, India 

Mexico: 

Saurer Mexico SA de C.V. Av. Sor Juana Inés de la Cruz T +52 55 5565 6200 Manuel Herrero Dominguez 

No.14–7° piso F +52 55 55 65 6305 labsdm@axtel.net 

Col. San Lorenzo C.P. 

MEX-54000 Tlalnepantla, 

Estado de México 

Switzerland: 

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 

USA: 

Melco Industries Inc. 1575 West, 124th Avenue T +1 303 457 1234 www.melco.com Dr. Jürg Henz 

USA-Denver, CO 80234 F +1 303 252 0508 info@melco.com 

Saurer Inc. 8801 South Boulevard T +1 704 554 08 00 www.saurerinc.com Dan Loftis 

P.O. Box 240828 F +1 704 554 73 50 info@saurerinc.com 

USA-Charlotte, NC 28224 

Transmission Technology 

Graziano Trasmissioni Group S.p.A. Via Cumiana 14 T +39 011 9570 1 www.grazianotrasmissioni.it Marcello Lamberto 

I-10090 Cascine Vica Rivoli (TO) F +39 011 959 4803 info@grazianotrasmissioni.it 

India: 

Graziano Trasmissioni India Pvt. Ltd. Plot no. 14, Udyog Kendra T +91 120 235 0820 www.grazianotrasmissioni.it Marcello Lamberto 

Greater Noida, District Ghaziabad F +91 120 235 0830 gtindia@grazianotrasmissioni.it 

Uttar Pradesh 201 304, India 

Italy: 

Aprilia Ingranaggi S.p.A. Via Nettunense, 250 T +39 06 92661111 www.grazianotrasmissioni.it Alberto Prono 

I-04011 Aprilia (LT) F +39 06 9269678 info@grazianotrasmissioni.it 

DEMM S.p.A. Via Mazzini, 230 T +39 0534 20111 www.grazianotrasmissioni.it Salvatore Puglisi 

I-40046 Porretta Terme (BO) F +39 0534 20283 info@grazianotrasmissioni.it 

108


Graziano Trasmissioni S.p.A. Via Cumiana 14 T +39 011 9570 1 www.grazianotrasmissioni.it Marcello Lamberto 

I-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 

I-12040 Cervere (CN) F +39 0172 474 601 info@grazianotrasmissioni.it 

UK: 

Graziano Trasmissioni CH Ltd. Balby, Doncaster T +44 1302 733 617 www.grazianotrasmissioni.it Gianni Sarti 

GB-DN4 8DW South Yorkshire F +44 1302 733 656 info@grazianotrasmissioni.it 

Graziano Trasmissioni UK Ltd. 9, Harley Industrial Park, Paxton Hill T +44 1480 403 453 www.grazianotrasmissioni.it Mike Finnigan 

St. Neots-Huntingdon F +44 1480 403 454 enquiries@grazianouk.com 

GB-Cambs PE19 6TA 

USA: 

Graziano Trasmissioni 2222 Northmont Parkway, Suite 300 T +1 770 476 0496 www.grazianotrasmissioni.it Dave McPherson 

North America Inc. USA-Duluth, GA 30096 F +1 770 623 3290 info@grazianotrasmissioni.it 

Surface Technology 

IonBond AG Olten Industriestrasse 211 T +41 62 287 86 86 www.ionbond.com a.i. Marco Marchetti 

CH-4600 Olten F +41 62 287 87 93 info@ch.ionbond.com 

Japan: 

Xaloy Japan KK Daiichi Yamashita-cho T + 81 45 661 3508 www.xaloy.com Gunther Hoyt 

Building, 74-1 Yamashita-cho F + 81 45 661 3507 info@us.xaloy.com 

Naka-ku, Yokohama 231, Japan 231 

Thailand: 

Xaloy Asia (Thailand) Ltd. 700/446 Moo Amata Nakorn T +66 38 717 084 www.xaloy.com Tim Farley 

Industrial Estate 4 F +66 38 458 177 info@th.xaloy.com 

Donhuaroh 

TH-Muang Chonburi 2000 


UK: 

IonBond Ltd. Unit 36, No. 1 Industrial Estate T +44 1 207 500 823 www.ionbond.com John Alan Stevenson 

Medomsley Road F +44 1 207 590 254 info@uk.ionbond.com 

GB-Consett, Durham DH8 6TS 

USA: 

IonBond LLC 1598 East Lincoln Avenue T +1 248 398 91 00 www.ionbond.com Rajiv Ahuja 

USA-Madison Heights, MI 48071 F +1 248 398 21 10 info@us.ionbond.com 

New Castle Industries Inc. 1399 County Line Road T +1 724 656 5600 www.xaloy.com Walter Gene Cox 

USA-New Castle, PA 16107 F +1 724 656 5620 info@us.xaloy.com 

Xaloy Inc. 102 Xaloy Way T +1 540 980 7560 www.xaloy.com Walter Gene Cox 

USA-Pulaski, VA 24301 F +1 540 980 5670 info@us.xaloy.com 

Xaloy Inc. 72 Stard Rd. T +1 603 929 8200 www.xaloy.com Walter Gene Cox 

USA-Seabrook, NH 03874 F +1 603 929 8331 info@us.xaloy.com 

109

SHARE STATISTICS.

Saurer registered share 2003 2002 2001 2000 1999 

Symbol SWX: SAUN, Security No. 1 234 514 nom. CHF 11.50 nom. CHF 12.50 nom. CHF 12.50 nom. CHF 13.30 nom. CHF 13.30 

(Shares were split ten-for-one in August 2001. The prior years have been restated.) 

Nominal share capital 

Number of shares 15 430 000 15 430 000 15 430 000 15 430 000 15 430 000 

Nominal share capital (CHF) 177 445 000 192 875 000 192 875 000 205 219 000 205 219 000 

Conditional capital1) Number of shares (for convertible bond) 3 000 000 3 000 000 3 000 000 3 000 000 – 

Nominal value (CHF) 34 500 000 37 500 000 37 500 000 39 900 000 – 

Number of shares (for stock option plans) 1 250 000 1 250 000 1 250 000 1 250 000 1 250 000 

Nominal value (CHF) 14 375 000 15 625 000 15 625 000 16 625 000 16 625 000 

Authorized capital 1) (for capital market transactions) 

Share statistics. 


Nominal value (CHF) 34 500 000 37 500 000 37 500 000 39 900 000 16 625 000 

Shares issued (year end) 


Shares with rights to dividends (year end) 


Treasury shares (year end) 


Distributions (in respect of the financial year shown) 

Capital repayment per share (CHF) 2) – 1.00 – 0.80 – 

Total distributions (CHF) 

(shown for year of payment) 

15 430 000 – 12 344 000 – 26 231 000 

Stock market capitalization 

Year end (CHF) 786 065 831 432 068 865 426 117 900 1 065 066 750 1 095 261 323 

Key data per share (EUR) 

Earnings (loss) per share (EUR) 3) 33.3 2.37 –3.61 3.13 –3.13 

Cash flow (EUR) (Net cash from operating activities) 8.83 10.28 8.20 7.70 –0.64 

Shareholders’ equity (EUR) 3) 32.68 30.65 29.21 33.02 28.66 

Key data per share (CHF) 

Earnings (loss) per share (CHF) 3) 5.06 3.48 –5.46 4.88 –5.01 

Cash flow (CHF) (Net cash from operating activities) 13.43 15.07 12.39 12.01 –1.02 

Shareholders’ equity (CHF) 3) 50.91 44.58 43.29 50.52 45.86 

Stock market prices (CHF) 

High (CHF) 59.00 40.75 79.00 114.00 89.30 

Low (CHF) 22.45 22.50 21.00 70.00 62.20 

Year end (CHF) 54.90 30.75 30.00 75.00 76.90 

1) The total of new shares issued must not exceed 5 000 000. See also Note 17, page 68. 

2) The Board of Directors of Saurer Ltd. intends to propose to the General Meeting of Shareholders on May 13, 2004, a share repurchase with capital redemption 

for a maximum of 930 000 registered shares. The repurchase of the shares to be canceled shall be by issue of negotiable put options – around 16.60 

options are foreseen per registered share. The price for this repurchase by Saurer Ltd. will be determined after the General Meeting of Shareholders. Under 

market conditions at the time of this communication a premium of 30% is planned. 

3) The years 1999 to 2002 are restated for the translation of goodwill and goodwill amortization at current rather than fixed historical currency rates. 

111

Imprint. 

Publisher: Saurer Ltd. 

Concept/Design: New Identity Ltd. 

Text: Saurer Corporate Communications 

Print: Linkgroup 

© Saurer Ltd. 2004 

Saurer Ltd. 

Textilstrasse 2 

CH-9320 Arbon 

Phone +41 71 447 52 91 

Fax +41 71 447 52 88 

www.saurer.com

We make our customers successful. - Oerlikon Barmag

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