Uster Technologies Ltd | Annual Report 2009 Uster Technologies ...

Uster Technologies Ltd | Annual Report 2009Assuring Textile Quality and ValueUster Technologies AG | Geschäftsbericht 2009Sicherung von Qualität und Mehrwert für Textilien

Milestones1875 Establishment of an aerial telegraphyworkshop in Uster.1927 Production of auxiliary weaving millmachines started.1944 Initiation of operations in the textileelectronics business.1957 First publishing of USTER ® STATISTICS.1982 Cooperation with the Chinese textileindustry.2003 Buyout from Zellweger Luwa by theManagement and two private-equityinvestment companies.2005 Development and assembly establishedin China.Sale of the one millionth USTER ®QUANTUM clearer.2006 Uster Technologies Ltd was sold to itsManagement and funds advised by AlphaBeteiligungsberatung GmbH & Co. KGvia a secondary buyout.2007 Listing on the main segment of SIX SwissExchange.2008 Introduction of new product groupsspecifically targeting the mid-marketsegment.2009 Acquisition of Zweigle product range.Broadening of existing shareholder basewith new strategic investor ToyotaIndustries Corporation.Meilensteine1875 Gründung eines Betriebes für oberirdischeTelegrafie in Uster.1927 Start der Produktion von Hilfsmaschinenfür Webereibetriebe.1944 Beginn der Aktivitäten im Bereich Textilelektronik.1957 Erste Veröffentlichung der USTER ®STATISTICS.1982 Zusammenarbeit mit der chinesischenTextilindustrie.2003 Buy-out aus der Zellweger Luwa Gruppedurch das Management und zwei Private-Equity-Gesellschaften.2005 Aufbau eines Entwicklungs- und Montagestandortesin China.1 Million USTER ® QUANTUM Reinigerverkauft.2006 Uster Technologies wird im Rahmeneines zweiten Buy-outs an das Managementsowie an durch die Alpha BeteiligungsberatungGmbH & Co. KG vertreteneFonds verkauft.2007 Kotierung am Hauptsegment der SIXSwiss Exchange.2008 Einführung von neuen, speziell auf dieBedürfnisse des mittleren Marktsegmentsausgerichteten Produkten.2009 Übernahme des Produktsortiments vonZweigle.Erweiterung des Aktionärskreises durchden neuen strategischen Investor ToyotaIndustries Corporation.

Achievements 2009• EBITA margin maintained at high level of 22.5%in a challenging market environment.• Positive net result of CHF 1.1 million despitelower sales level, underlining the Company’s proactiveand effective cost management.• Acquisition of Zweigle product range adding toUSTER ® ’s laboratory yarn testing offering.• Maintained strong relationship with the ChinaFiber Inspection Bureau (CFIB) and the UnitedStates Department of Agriculture (USDA) servingtheir expansion and replacement plans.• Launch of a further new mid-range system fortesting cotton fiber properties.• Strengthening of financial and operational flexibilityand deleveraging following the strongendorsement of new strategic investor ToyotaIndustries Corporation.• Uster Group well positioned to participate in theeconomic upswing once markets recover.Höhepunkte 2009• EBITA-Marge in schwierigem Marktumfeld mit22.5% weiterhin auf hohem Niveau.• Positives Nettoergebnis in Höhe von CHF 1.1 Mio.trotz niedriger Umsätze – dank proaktivem undeffektivem Kostenmanagement.• Erweiterung des Portfolios im Bereich Garnprüfungfür Labors durch die Übernahme des Produktsortimentsvon Zweigle.• Weiterhin intensive Beziehungen mit der chinesischenBehörde für Faserprüfung (CFIB) und demUS-Landwirtschaftsministerium (USDA) dankderen Erweiterungs- und Austauschplänen.• Einführung eines neuen Systems für die Prüfungvon Baumwollfasern im mittleren Marktsegment.• Höhere finanzielle und operative Flexibilität undEntlastung der Bilanz nach starker Unterstützungdurch den neuen strategischen Investor ToyotaIndustries Corporation.• Gute Positionierung der Gruppe, um am Wiederaufschwungzu partizipieren, sobald sich dieMärkte erholen.Gross Salesin CHF 1,000EBITAin CHF 1,000in percent of gross sales2009100,763200922.5 %22,7092008154,893200822.1 %34,1682007186,666200728.1 %52,3842006 163,900200628.2 %46,1932005143,651200521.4 %30,729Net Resultin CHF 1,000in percent of gross salesFree Cash Flowin CHF 1,00020091.1%1,078200911,27820083.4 %5,316200829,40920071.9 %3,587200737,084200618.3 %29,957200645,348200512.8 %18,391200532,997

Products and ServicesTextile Production Process “Fiber to Fabric”i i i i i iProcess StepGinning and CottonClassingFiber Testing Yarn Testing Yarn Clearing Fabric QualityAssuranceIntelligentSourcingUSTER ® Products• INTELLIGIN• HVI Systems• HVI Systems• AFIS PRO• LVI• TESTER• TENSORAPID• TENSOJET• CLASSIMAT• SLIVERGUARD• ZWEIGLE• QUANTUM• STATISTICS• CLASSIMAT• TENSORAPID• TENSOJET• ZWEIGLE• USTERIZED ®• INTELLIGENTSOURCING• Quality ProfilesUSTER ® Complementary Products and ServicesIntegrated Data and Expert SystemsUSTER ® STATISTICS and USTERIZED ®After Sales Services and Textile Technology

PortraitThe Uster Group is the leading high technologyinstrument manufacturer of products forquality measurement and certification for thetextile industry. The Group provides testing andmonitoring instruments, systems and servicesthat allow optimization and certification of qualitythrough each individual stage of textile production;from the raw textile fiber, such as cotton,wool or synthetic filament yarns, to thefinal finished fabric. The Uster Group providesbenchmarks that are the basis for the trading oftextile products at assured levels of quality acrossglobal markets.Uster Technologies Ltd was established in 1875as an aerial telegraphy workshop in Uster (Switzerland)and became an independent companyin 2003 following the acquisition of the ZellwegerUster division of Zellweger Luwa by the Managementand funds advised by two private-equityinvestment companies. In 2006 Uster TechnologiesLtd was acquired by its Management andfunds advised by Alpha BeteiligungsberatungGmbH & Co. KG. In 2007 Uster Technologies Ltdbecame a public company by listing its shareson the SIX Swiss Exchange.KurzportraitUster Technologies AG ist der weltweit führendeHersteller von Hightech-Produkten für dieQualitätsprüfung und Zertifizierungen in derTextilindustrie. Das Unternehmen bietet technologischanspruchsvolle Systeme und Dienstleistungenan, welche die Herstellung von Produktenin optimaler Qualität auf jeder Stufe derTextilverarbeitung gewährleisten; von der rohenTextilfaser wie Baumwolle, Wolle oder synthetischenGarnen bis zum fertigen Gewebe. UsterTechnologies legt Qualitätsstandards fest, dieals Grundlage für den globalen Handel mit Textilproduktendienen.Uster Technologies AG wurde 1875 als Betriebfür oberirdische Telegrafie in Uster (Schweiz)gegründet. Seine Selbständigkeit erlangte dasUnternehmen nach der Übernahme der DivisionZellweger Uster der Zellweger Luwa Gruppe durchdas Management sowie durch von zwei Private-Equity-Gesellschaften vertretene Fonds. 2006wurde Uster Technologies AG durch ihr Managementsowie durch von der Alpha BeteiligungsberatungGmbH & Co. KG betreute Fonds erworben.Im Jahr 2007 wurde das Unternehmen durchdie Kotierung seiner Aktien an der SIX SwissExchange zu einer Publikumsgesellschaft.

Uster, SwitzerlandIstanbul, TurkeySuzhou, ChinaShanghai, ChinaOsaka, JapanBangkok, ThailandCoimbatore, IndiaSão Paulo, Brazil

Table of ContentsInhaltsverzeichnisForeword / Vorwort ........................................................................................................................................ 3Operational Review / Operativer Rückblick ................................................................................................... 8Sales and Marketing / Vertrieb und Marketing ............................................................................................. 16Research and Innovation / Forschung und Entwicklung ............................................................................. 20Operations / Produktion und Logistik ......................................................................................................... 22Outlook / Ausblick ....................................................................................................................................... 24Corporate Governance ................................................................................................................................. 26Comment on the Consolidated Financial Statements .................................................................................. 50Uster Group – Consolidated Financial Statements ...................................................................................... 52Uster Group – Notes to the Consolidated Financial Statements .................................................................. 57Report of the Statutory Auditor on the Consolidated Financial Statements ...............................................98Uster Technologies Ltd – Financial Statements ......................................................................................... 100Uster Technologies Ltd – Notes to the Financial Statements ..................................................................... 102Report of the Statutory Auditor on the Financial Statements ................................................................... 108Information for Investors ........................................................................................................................... 110

ForewordVorwortDear Fellow ShareholdersSehr geehrte Aktionärinnen und AktionäreIn the financial year 2009 we faced an uncertain andweak global economy that affected the entire valuechain in the textile industry, including quality measurementand certification systems. Managementhad to take difficult actions; nevertheless it successfullynavigated the Group through the depressedmarket environment in the overall textile industry.Following the sharp decrease in demand for textilemachinery equipment and quality systems in thefourth quarter 2008, markets remained weak in thefirst half of 2009. As of the second half, the marketenvironment stabilized and the sales decline flattenedout before starting to improve slightly. Positivedevelopments have been seen especially in thecotton classing and yarn clearer areas as well as inthe retrofit business to existing installations.We are confident that the market will continue to recoverin 2010 and allow us to return to the businesslevels seen in 2007 in the mid-term. This view is alsosupported by positive signs from many of our customers,including the textile machinery manufacturers.Successful Navigation through the CrisisFaced with a developing crisis in the textile industry,management pro-actively addressed the ensuingchallenges:• First we implemented the operational measuresapproved by the Board of Directors in November2008 to adjust the cost base of the Group to lowerdemand. In order to achieve maximum benefitfrom these measures, implementation was completeby the end of the first quarter. The plan included,amongst other initiatives, a reduction ofthe world-wide workforce by approximately 10%and the introduction of a short-time working programin Uster.• Second we continued to focus on further developingand strengthening the operational business.We maintained R&D investments at a high level,thereby broadening our product and servicepipeline as well as expanding the global marketorganization as a source of future growth.Das Geschäftsjahr 2009 war von einer unsicheren undgeschwächten Weltwirtschaftslage gekennzeichnet,die sich auf die gesamte Wertschöpfungskette in derTextilindustrie, einschliesslich QualitätsprüfungsundZertifizierungssysteme, auswirkte. Die Geschäftsleitungstand vor schwierigen Aufgaben. Dennochist es dem Unternehmen gelungen, sich in diesembedrückten Marktumfeld erfolgreich zu behaupten.Nach dem deutlichen Nachfragerückgang bei Textilmaschinenund Qualitätssystemen im vierten Quartal2008 entwickelten sich die Märkte im ersten Halbjahr2009 weiterhin verhalten. Im zweiten Halbjahrstabilisierte sich das Marktumfeld. Der negative Umsatztrendwurde gestoppt, und es setzte wieder einleichter Anstieg ein. Positive Entwicklungen wareninsbesondere in den Bereichen Baumwollklassierungund Garnreiniger sowie im Retrofit-Geschäft für bestehendeInstallationen zu beobachten.Wir sind zuversichtlich, dass sich der Markt 2010 weitererholen wird und wir mittelfristig zum Umsatzniveauvon 2007 zurückkehren können. Hierfür sprechen auchdie positiven Signale, die wir von vielen unserer Kunden,einschliesslich der Textilmaschinenhersteller, erhalten.Erfolgreiche Bewältigung der KriseAngesichts der sich fortentwickelnden Krise in derTextilindustrie ergriff die Geschäftsleitung proaktivMassnahmen, um die sich stellenden Herausforderungenzu bewältigen:• Erstens setzten wir die vom Verwaltungsrat im November2008 beschlossenen operativen Massnahmenzur Anpassung der Kostenbasis der Gruppe an diegeringere Nachfrage konsequent um. Um einenoptimalen Nutzen aus diesen Massnahmen zu ziehen,wurde ihre Realisierung bis Ende des erstenQuartals abgeschlossen. Das Programm umfassteu. a. eine Reduzierung der weltweiten Belegschaftum rund 10% und die Einführung von Kurzarbeitin Uster.• Zweitens konzentrierten wir uns auf die Weiterentwicklungund Stärkung des operativen Geschäfts.Mittels nachhaltig hoher Investitionen in ForschungForeword | Vorwort 3

Max-Ulrich Zellweger, Geoffrey ScottIn addition we evaluated and seized opportunitiesto enhance our existing offering. The acquisitionof Zweigle’s laboratory yarn testing product portfoliois a good example of our efforts in this regard.• Third we successfully deleveraged the balance sheetby attracting the new strategic investor Toyota IndustriesCorporation. This transaction represents astrong endorsement of the Company’s leading marketposition from a major global industrial groupoffering technical and commercial synergies andnew joint business development opportunities. Weare especially proud of the fact that this was realizedat favorable conditions relative to the depressedfinancial market environment. This further underlinesthe Uster Group’s excellent market position.At the General Meeting on March 30, 2010, theBoard of Directors will propose the election of arepresentative from Toyota Industries Corporationto the Board of Uster Technologies Ltd.A further achievement in 2009 of which we areproud was meeting our objective to contain the negativeimpact of the cyclical downturn on ourbusiness and organization whilst maintainingprofitability levels. Moreover, with an EBITA marginof 22.5% the Group underlined its lean and flexibleorganizational structure and its ability to proactivelyadjust the cost base to lower demand.Renewed Focus on Mid-Term OpportunitiesWe have not completely turned the corner yet, but wehave reached the point where the Group is now ableto focus again on the industry’s mid-term opportuniundEntwicklung erweiterten wir unsere ProduktundServicelinien. Parallel dazu bauten wir die weltweiteMarktorganisation als Quelle für zukünftigesWachstum aus.Zusätzlich prüften und nutzten wir Möglichkeitenzur Erweiterung unseres bestehenden Angebots.Ein gutes Beispiel für diese Initiativen ist der Erwerbdes Zweigle-Produktsortiments für die Garnprüfungim Labor.• Drittens ist es uns mit dem Gewinn des neuen strategischenInvestors Toyota Industries Corporationgelungen, die Bilanz zu entlasten und Schuldenabzubauen. Der Einstieg dieses bedeutenden globalenIndustriekonzerns stärkt die führende Positiondes Unternehmens und eröffnet technische undkommerzielle Synergien wie auch neue gemeinsameMarktentwicklungschancen. Wir sind besondersstolz, dass wir diese Transaktion in Anbetracht desschwachen Finanzmarktumfelds zu günstigen Bedingungenabschliessen konnten. Dies unterstreichteinmal mehr die ausgezeichnete Marktverankerungder Uster-Gruppe. Der Verwaltungsrat von UsterTechnologies AG wird der ordentlichen Generalversammlungvom 30. März 2010 die Zuwahl einesVertreters von Toyota Industries Corporation vorschlagen.Ein weiterer Erfolg des Jahres 2009, mit dem wir sehrzufrieden sind, war die Erreichung unseres Ziels, dieAuswirkungen des Konjunkturabschwungs auf unserGeschäft und Unternehmen zu begrenzen und gleichzeitigdas Profitabilitätsniveau aufrechtzuerhalten.Die EBITA-Marge von 22.5% unterstreicht die schlanke,flexible Organisationsstruktur der Gruppe undihre Fähigkeit, die Kostenbasis proaktiv an die geringereNachfrage anzupassen.Neuer Fokus auf mittelfristige MarktchancenDie Talsohle ist durchschritten und wir haben jetzteinen Punkt erreicht, an dem sich die Gruppe wiederauf die mittelfristigen Aussichten und Marktchancenanstelle kurzfristiger Sachzwänge und Ereignissekonzentrieren kann. Wir sind ermutigt von denpositiven Marktsignalen in den letzten Monaten,wissen aber auch, dass eine nachhaltige Besserung4 Uster Technologies Ltd | Annual Report 2009

ties rather than short-term conditions and events. Weare encouraged by the positive market signs seen inthe past months, but we also recognize that a sustainedimprovement in overall economic conditions willtake time and that the market will not return to thelevel from where the decline started in just one year.We are pleased to note that our achievements are recognizedby the investor community, whose restoredconfidence in our Group was reflected in a significantincrease of our stock price in the second half of 2009.In order to maintain the financial robustness of theGroup going forward, the Board of Directors will alsopropose at the General Meeting to refrain from adividend payment for the 2009 financial year.ThanksThere was a lot of hard work to do in 2009 and thereis more to come in 2010. Given the prevailing marketconditions, a high level of flexibility as well as astrong commitment to the Company’s operationalpriorities were required from all employees. Theyall worked hard to limit the impact of decliningdemand and consumer spending on our industry;many staff members in Uster even had to accept reducedworking hours designed to downsize productioncapacity temporarily. On behalf of the Board ofDirectors and the Executive Committee, we thank allemployees for their steadfast dedication. We alsothank our business partners, customers and suppliersfor their excellent collaboration with our teams.Last but not least, we cordially express our thanksto Shareholders for their confidence in ExecutiveManagement and for supporting our strategy tosecure the Company’s business fundamentals in anattractive niche market and to strengthen theGroup’s mid- and long-term growth prospects.der Gesamtwirtschaftslage Zeit braucht und der Marktnicht innerhalb eines Jahres auf den Stand vor Beginnder Rezession zurückkehrt. Wir haben erfreut festgestellt,dass unsere Erfolge auch von den Investorenwahrgenommen und gewürdigt werden. Das wiedergestärkteVertrauen in unsere Gruppe spiegelte sichin einem deutlichen Anstieg des Aktienkurses imzweiten Halbjahr 2009 wider. Mit dem Ziel, die solideFinanzierung der Gruppe auch in den kommendenJahren zu gewährleisten, schlägt der Verwaltungsratder Generalversammlung vor, auf die Auszahlungeiner Dividende für das Geschäftsjahr 2009 zu verzichten.DanksagungDas Jahr 2009 hat uns viel abverlangt und im Jahr 2010liegen weitere Herausforderungen vor uns. Die gegenwärtigeMarktsituation forderte von allen Mitarbeitendengrosse Flexibilität und äussersten Einsatz,um die operativen Ziele des Unternehmens gemeinsamzu erreichen. Alle gaben ihr Bestes, um die Auswirkungender sinkenden Nachfrage und der rückläufigenKonsumausgaben möglichst gering zu halten.Viele Mitarbeitende in Uster waren von Kurzarbeitbetroffen, welche die Produktionskapazitäten temporärverringerte. Im Namen des Verwaltungsratesund der Konzernleitung sprechen wir allen für ihrenengagierten Beitrag unseren Dank aus. Des Weiterendanken wir unseren Geschäftspartnern, Kunden undLieferanten für die ausgezeichnete Zusammenarbeitmit unseren Teams. Nicht zuletzt geht ein herzlichesDankeschön an unsere Aktionäre für ihr Vertrauenin die Geschäftsleitung und für ihre Unterstützungunserer Strategie, die Verankerung des Unternehmensin einem attraktiven Nischenmarkt zu festigen unddie mittel- und langfristigen Wachstumsaussichtender Gruppe zu verbessern.Max-Ulrich ZellwegerChairman of the Board of DirectorsDr. Geoffrey ScottChief Executive OfficerForeword | Vorwort 5

Quality means the customercomes back and not the product!A high level of short fibers and excessive hairiness in yarn canbe the cause for the formation of pilling in knitted bed sheets,visible after a few washing cycles: an unpleasant qualityproblem for the user whose expectation of durability is notmet. The user is disappointed and will return the product –a costly problem for the retailer.In order to avoid such quality problems, the fiber managementprocess in spinning mills needs to be monitored.Qualität bedeutet, den Kunden undnicht das Produkt wiederzusehen!Ein hoher Anteil an Kurzfasern und übermässige Haarigkeitim Garn kann bei Textilien schon nach wenigen Waschgängenzur Bildung von Pilling führen – ein unerfreuliches Qualitätsproblem.Die Erwartungen des Kunden an die Strapazierfähigkeitdes Betttuchs werden in diesem Fall nicht erfüllt.Enttäuscht bringt er das Produkt zurück zum Detailhändler,dem dadurch unliebsame Kosten entstehen.Um solche Qualitätsprobleme zu vermeiden, muss der Kaufund die Verarbeitung von Fasern in Spinnereien überwachtwerden.

Fiber TestingCotton is a natural product with inherent variability that canhave a significant effect on the quality of yarn. Thereforeit has to be purchased, blended and managed through themanufacturing process to match the quality requirement ofthe yarn. Such processes are also the key to cost saving inthe area of raw material purchasing. Raw material costs are50 – 70% of the entire manufacturing costs in a spinning mill.Modern fiber testing systems such as USTER ® HVI orUSTER ® AFIS can determine the most important fiber qualitycharacteristics in a few seconds.FaserprüfungBaumwolle hat als Naturprodukt eine natürliche Variation,was erhebliche Auswirkungen auf die Garnqualität hat.Daher muss bei Kauf, Mischung und während der gesamtenHerstellung darauf geachtet werden, dass die Fasern überQualitätsmerkmale verfügen, die zu einem den Anforderungendes Abnehmers entsprechenden Garn führen. Gerade beimRohmaterialeinkauf ist eine sorgfältige Prüfung unerlässlich,um später Qualitätsmängel und die damit verbundenen Kostenzu vermeiden. Die Kosten des Rohmaterials machen in einerSpinnerei 50 – 70% der gesamten Herstellungskosten aus.Moderne Faserprüfsysteme wie USTER ® HVI oder USTER ® AFISkönnen die Baumwollfasern innerhalb Sekunden auf diewichtigsten Qualitätskriterien testen.Corporate Governance 7

Operational ReviewOperativer RückblickUster Technologies Ltd looks back on a year in whichthe rapid decline in the textile industry reached thebottom and sales stabilized at a significantly lowerlevel. The entire textile industry value chain sufferedfrom declining consumer spending. The knock-oneffects included lower sales of new clothes, furnishingand other textile fabrics. Consequently demand forraw materials and textile machinery declined togetherwith a reduction in investment appetite from customers.However, there were some positive economic indicators,predominantly in the second half of the year, thatsignaled a recovery of general market conditions. Animportant factor was the slight improvement in financingconditions for new investments in all majormarkets as the pressure on international financialmarkets eased. Furthermore demand for new yarnproduction picked up after producers reduced excessyarn stocks in the initial months of the year, rekindlinginterest in measuring system investments asthe demand for quality remains a key priority fortextile manufacturers in order to secure and growtheir businesses.At the same time reduced cotton prices combinedwith renewed demand for yarn resulted in an improvementin margins for yarn producers, the so-calledconversion margin, encouraging them to plan newinvestments in quality improvements – commitmentsthat had been postponed until the markets showedsigns of revitalization.Lastly, attention is drawn to the stable developmentof the important Chinese market. Thanks to the minimalexposure of the Chinese financial system to thesubprime crisis and well-directed government stimuluspackages, textile manufacturers in China continuedto invest in sustainable quality improvements,albeit not as much as in previous years.Strong Margins MaintainedDespite the challenging market environment in the2009 financial year Uster Technologies Ltd deliveredstrong margins on a reduced sales level. Gross salesdeclined to CHF 100.8 million (2008: CHF 154.9 million)whilst the Group reached an EBITA of CHF 22.7 millionUster Technologies AG blickt auf ein Jahr zurück, indem der massive Geschäftsrückgang in der Textilindustrieseinen Tiefpunkt erreichte und sich der Umsatzauf deutlich niedrigerem Niveau stabilisierte. Diegesamte Textilindustrie wurde durch rückläufigeKonsumentenausgaben belastet. Dies schlug sich ineinem Umsatzrückgang bei neuer Kleidung, textilerWohneinrichtung und anderen Textilprodukten nieder.Demzufolge sank die Nachfrage nach Rohstoffenund Textilmaschinen parallel zur abnehmenden Investitionsbereitschaftder Kunden.Es gab aber auch – vor allem im zweiten Halbjahr –positive Zeichen, die auf eine konjunkturelle Erholungder allgemeinen Marktlage hindeuteten. Ein wichtigerFaktor war die leichte Verbesserung der Finanzierungsbedingungenfür Neuinvestitionen in allengrossen Märkten sowie der nachlassende Druck an deninternationalen Finanzmärkten. Ferner erhöhte sichdie Nachfrage nach der Produktion von neuem Garn,nachdem die Hersteller ihre Überbestände an Garn inden ersten Monaten des Jahres reduziert hatten. Diesführte zu einer Wiederbelebung des Interesses an Prüfsystemen,denn erstklassige Qualität ist und bleibt fürTextilhersteller eine Priorität – sie bildet die Voraussetzung,um die eigene Wettbewerbsposition zu haltenund auszubauen.Zudem wirkten sich die rückläufigen Baumwollpreisezusammen mit der neuen Nachfrage nach Garnpositiv auf die Margen der Garnhersteller, die so genanntenConversion-Margen, aus und veranlasste sie,neue Investitionen in Qualitätsverbesserungen zuplanen – Vorhaben, die aufgeschoben worden waren,bis die Märkte Anzeichen einer Erholung zeigten.Schliesslich entwickelte sich der wichtige chinesischeMarkt relativ stabil. Dank der minimalen Beeinträchtigungdes chinesischen Finanzsystems durch dieSubprime-Krise und gezielter staatlicher Förderprogrammeinvestierten die Textilhersteller in Chinaweiter in nachhaltige Qualitätsverbesserungen, wenngleichauf niedrigerem Niveau als in früheren Jahren.Weiterhin starke MargenTrotz des schwierigen Marktumfelds erzielte UsterTechnologies AG im Geschäftsjahr 2009 bei niedrige-8 Uster Technologies Ltd | Annual Report 2009

(2008: CHF 34.2 million) keeping the margin at a stronglevel of 22.5% (2008: 22.1%). The net result amountedto CHF 1.1 million (2008: CHF 5.3 million).Stable Offline, Improving Online BusinessIn 2009 the cotton classing business, which is fundedby governments, and the yarn clearer business,which was driven by renewed demand for yarn, developedpositively, recovering from the low levelswhich were seen in the fourth quarter of 2008 and thefirst quarter of 2009. The pleasing development inboth business areas was mainly driven by the resilienceof the Chinese textile industry to the general marketdownturn as Chinese textile producers continue tofocus on quality improvements.In the cotton classing business the Company maintainedits strong relationship with the China FiberInspection Bureau (CFIB). To fulfill their ongoingexpansion plans and to complete the current five yearproject plan, CFIB placed high levels of orders forUSTER ® HVI cotton classing systems, resulting in thelargest classing project ever handled by our Company.In parallel the Uster Group delivered a number ofclassing systems to the United States Department ofAgriculture (USDA) as part of the agency’s replacementprogram for its offices throughout the cottongrowing regions in the US. Additional business forthe HVI cotton classing systems was secured in othercotton growing regions including India, Africa andCentral Asia. As cotton prices began to increase inrecent months, manufacturers are again focusing onquality differentiation.In the laboratory yarn and fiber testing business theGroup’s revenues were impacted by slow business inIndia, Turkey and Pakistan whereas sales in Chinaremained relatively stable, although at lower levels.The number of new projects and mill expansions alsodeclined world-wide in 2009. However, the focus ofmany textile manufacturers shifted towards efficiencyimprovements and cost reductions to ensurehigh quality, resulting in new demand for USTER ®laboratory systems. Thanks to the acquisition of theproduct range of Zweigle the Uster Group successfullycomplemented and further strengthened itsren Umsätzen hohe Margen. Bei einem Rückgang desBruttoumsatzes auf CHF 100.8 Mio. (2008: CHF 154.9 Mio.)erwirtschaftete die Gruppe ein EBITA von CHF 22.7 Mio.(2008: CHF 34.2 Mio.) und hielt die Marge mit 22.5%(2008: 22.1%) auf hohem Niveau.Trotz des äusserstschwierigen Markumfeldes betrug das Nettoergebnispositive CHF 1.1 Mio. (2008: CHF 5.3 Mio.).Stabiles Offline-, besseres Online-GeschäftDie Geschäfte mit der von staatlicher Seite finanziertenBaumwollklassierung und mit Garnreinigernentwickelten sich im Geschäftsjahr 2009, ausgelöstdurch die wiederbelebte Nachfrage nach Garn, positivund erholten sich von den Tiefständen im viertenQuartal 2008 und ersten Quartal 2009. Die erfreulicheEntwicklung in beiden Geschäftsbereichen gründeteprimär auf der vergleichsweise robusten chinesischenTextilindustrie, umso mehr als die chinesischen Textilherstellerweiter auf Qualitätsverbesserungen setzen.Im Baumwollklassierungsgeschäft gelang es demUnternehmen, seine enge Beziehung zum chinesischenAmt für Faserprüfung (CFIB) aufrechtzuerhalten. ZurUmsetzung laufender Expansionspläne und Erfüllungdes aktuellen Fünfjahres-Projektplans bestellte dasCFIB eine grosse Anzahl neuer USTER ® HVI-Baumwollklassierungssysteme.Es handelte sich um das grössteKlassierungsprojekt, das von Uster Technologies AGje abgewickelt wurde. Gleichzeitig lieferte die Uster-Gruppe im Rahmen des laufenden Erneuerungsprogrammssämtlicher Prüfstellen innerhalb derBaumwollregionen der Vereinigten Staaten weitereKlassierungssysteme an das US-Landwirtschaftsministerium(USDA). Darüber hinaus erhielt Uster TechnologiesAG neue Aufträge für Baumwollklassierungssystemeaus anderen Baumwollregionen wieIndien, Afrika und Mittelasien. Da die Baumwollpreisein den letzten Monaten erneut gestiegen sind,setzen die Hersteller wieder vermehrt auf Qualität alsDifferenzierungsmerkmal.Bei den Garn- und Faserprüfsystemen für Textillaborsbeeinträchtigte das schwache Geschäft in Indien, derTürkei und Pakistan den Konzernumsatz. Parallel dazublieben die Umsätze in China relativ stabil, wenngleichauch auf niedrigerem Niveau. Die Anzahl neuer Pro-Operational Review | Operativer Rückblick 9

Inconsistent quality meansloss of profitsVariations in the thickness of the yarn cause an uneven appearance– often recognized as a pattern, an irregular structure or avariation in color.Today consumers’ increased quality expectations demand thequality to be matched with the brand and the price paid. In thecase of this T-shirt the retailer is forced to sell the product as“second quality” at a lower price or may not be able to sell theproduct at all.Multi-purpose laboratory testing systems can measure yarnproperties to ensure consistent quality.Unbeständige Qualität wirkt sichauf den Profit ausEine hohe Garnungleichmässigkeit führt zu einem ungleichmässigenGewebebild. Es entstehen Muster oder Unterschiedein der Farbintensität.Die hohen Erwartungen der Konsumenten setzen voraus, dassdie Qualität dem Preis und der Marke entspricht. Im Fall desabgebildeten T-Shirts ist der Händler gezwungen, das Produktals „2. Wahl“ zu einem reduzierten Preis anzubieten, wenn eres denn überhaupt verkaufen kann.Mit Mehrzweck-Laborprüfsystemen lassen sich Garneigenschaftenmessen und damit eine beständige Qualitätgewährleisten.

Yarn TestingA spinning process includes several manufacturing stages,which have to be maintained properly. It is particularlyimportant that a spinning mill is able to produce reliably ayarn of consistent quality over a long period.Quality management tools such as the USTER ® TESTER 5,the USTER ® TENSORAPID 4, the USTER ® TENSOJET 4, theUSTER ® ZWEIGLE TWIST TESTER 5, etc., are importantinstruments to keep the entire spinning process on the samequality level.GarnprüfungDer Spinnprozess umfasst mehrere Schritte, die es sorgfältigauszuführen gilt. Entscheidend ist die Fähigkeit der Spinnerei,konstant zuverlässige Qualität zu gewährleisten.Instrumente für das Qualitätsmanagement wie beispielsweiseder USTER ® TESTER 5, der USTER ® TENSORAPID 4, derUSTER ® TENSOJET 4 und der USTER ® ZWEIGLE TWIST TESTER 5tragen wesentlich dazu bei, das Qualitätsniveau im gesamtenSpinnprozess gleichmässig hoch zu halten. Corporate Governance 11

position as the world leader and authority in yarntesting and certification. This partnership was wellaccepted by the industry.In the yarn clearer business Uster Technologies Ltdcontinued to face challenging market conditions inthe first half of 2009, as many of the textile machinerysuppliers reported a significant decline in equipmentorders. In the second half of the year the situationslightly improved as demand in yarn productionpicked up again, which also encouraged new investmentsin machinery and quality systems. Also directsales to Chinese customers for retrofit improvementsto existing installations increased. In fact, yarn producerswith strong market positions in China wereable to maintain or – to some extent – even increaseorders. Equipment producers predominantly sellingto India and the rest of Central Asia suffered from thelow business volumes in these regions. In the secondhalf of 2009 USTER ® sales specialists began to see arenewed interest in quality investments but projectfinancing still remains an issue in many markets.The after-sales service business remained at solidlevels, albeit below the previous year’s levels. Thedeclines in this business were limited by the customers’drive for quality, which enables them to strengthentheir business competitiveness.jekte und Anlagenerweiterungen entwickelte sich2009 weltweit ebenfalls rückläufig. Dadurch, dassviele Textilhersteller ihren Schwerpunkt auf Produktivitätsverbesserungenund Kosteneinsparungen inder Qualitätssicherung verlagert haben, ist jedocheine neue Nachfrage nach USTER ® -Laborsystemenentstanden. Mit der Übernahme des Zweigle-Sortimentskonnte die Uster-Gruppe ihre Position als weltweitführender Anbieter und Experte für die Prüfung undZertifizierung von Garnen erfolgreich ausbauen undstärken. Diese Partnerschaft wurde von den Kundensehr positiv aufgenommen.Bei den Garnreinigern kämpfte Uster Technologies AGim ersten Halbjahr 2009 weiterhin mit schwierigenMarktbedingungen. Viele Textilmaschinenherstellermeldeten erneut beträchtliche Auftragsrückgänge.Im zweiten Halbjahr entspannte sich die Lage etwas,als die Nachfrage in der Garnproduktion wieder anzog.Diese Erholung löste auch neue Investitionen inMaschinen und Qualitätssysteme aus. Parallel dazunahmen im Retrofit-Geschäft für bestehende Installationendie Direktverkäufe an chinesische Kunden zu.Während Garnhersteller mit starken Marktpositionenin China ihre Auftragseingänge konstant oder – ingewissem Umfang – sogar erhöhen konnten, warenMaschinenhersteller, deren Absatzmärkte vorrangigin Indien und den übrigen Ländern Mittelasiens liegen,von den geringen Geschäftsvolumen in diesenRegionen betroffen. In der zweiten Jahreshälfte 2009beobachteten die USTER ® -Vertriebsspezialisten erstmalswieder ein Interesse an Investitionen in Qualität.Allerdings gestaltete sich die Projektfinanzierungin vielen Märkten weiterhin schwierig.Der After-Sales-Bereich hielt sich solide, konnte aberdas Vorjahresniveau nicht erreichen. Insgesamt istdas Ausmass des Umsatzrückgangs in diesem Bereichbegrenzt, da hohe Qualität für die Erhaltung und denAusbau der Wettbewerbsfähigkeit der Kunden vongrosser Bedeutung ist.12 Uster Technologies Ltd | Annual Report 2009

Strengthening of Operating and FinancialFlexibilityIn 2009 Uster Technologies Ltd maintained high investmentsin product and market development inorder to secure the Company’s future sustainable developmentand long-term growth prospects. However,owing to the sharp reduction in demand fromthe textile industry, management was forced to implementoperational measures to adjust the cost base ofthe Group. The program included a reduction of theworld-wide workforce by approximately 10% througha combination of early retirement and redundancyprograms, the introduction of a short-time workingprogram in Uster as well as a group-wide cost-savingprogram. In the Uster operation approximately 90%of the staff were affected, reducing the working hoursby 22% on average.In November 2009 Uster Technologies Ltd raisedgross proceeds of CHF 43.9 million and broadenedits shareholder base with the new strategic investorToyota Industries Corporation, which acquired 1.9 millionnew shares issued by a capital increase that hadpreviously been approved by the General Assembly inMarch 2009. The shares were acquired by Toyota at apremium of 10% above market price. The transactionestablished a basis for closer collaboration betweenthe two companies that will produce synergies andnew joint business development opportunities goingforward. The proceeds of the transaction were primarilyused to deleverage the balance sheet and toinvest in product and market developments.Stärkung der operativen und finanziellenFlexibilitätIm Geschäftsjahr 2009 tätigte Uster Technologies AGerneut hohe Investitionen in Produkt- und Markterweiterungen,um die künftige nachhaltige Entwicklungund langfristigen Wachstumsaussichten desUnternehmens sicherzustellen. Aufgrund des markantenNachfragerückgangs in der Textilindustriewar die Geschäftsleitung jedoch gezwungen, betrieblicheMassnahmen zur Anpassung der Kostenstrukturder Gruppe umzusetzen. Das Programm umfasste eineReduzierung der weltweiten Belegschaft um rund 10%durch eine Kombination aus frühzeitigen Pensionierungenund Kündigungen, die Einführung von Kurzarbeitin Uster sowie ein konzernweites Kostensenkungsprogramm.Am Standort Uster waren zirka 90%der Mitarbeitenden betroffen, deren Arbeitszeit umdurchschnittlich 22% verkürzt wurde.Im November 2009 nahm Uster Technologies AG neuesKapital in Höhe von brutto CHF 43.9 Mio. auf underweiterte ihren Aktionärskreis durch den neuenstrategischen Investor Toyota Industries Corporation.Toyota erwarb 1.9 Mio. neue Aktien mit einemAufschlag von 10% auf den Marktpreis. Die Aktienwurden aus dem genehmigten Aktienkapital geschaffen,das von der Generalversammlung im März 2009gutgeheissen wurde. Die Transaktion schafft dieGrundlage für eine engere Zusammenarbeit zwischenden beiden Unternehmen, aus der sich künftigeSynergien und neue gemeinsame Entwicklungschancenergeben werden. Der Erlös aus der Transaktionwird hauptsächlich zur Entlastung der Bilanzund für Investitionen in Produkt- und Marktentwicklungenverwendet.Operational Review | Operativer Rückblick 13

Poor quality can destroybrand reputationA white spot on the fabric results from a defect of the yarn notbeing eliminated before weaving the denim. Even high-priceddesigner jeans sometimes show signs of poor quality.Building the reputation of a brand takes many years – thisreputation can be destroyed within minutes by poor quality.100 % of the yarn production at the winding or spinningmachine can be monitored with sophisticated yarn clearersto eliminate such disturbing faults.Schlechte Qualität schadet demMarkenimageEine weisse Stelle im Gewebe ist die Folge eines Garndefekts,der vor dem Weben nicht behoben wurde. Selbsthochpreisige Designer-Jeans weisen manchmal solcheQualitätsmängel auf.Der Aufbau eines starken Markenimage nimmt vieleJahre in Anspruch – und kann innerhalb kurzer Zeit durchmangelnde Qualität zerstört werden.Mit hochentwickelten Garnreinigern lässt sich die Garnproduktionauf den Spul- oder OE-Spinnmaschinen lückenloszu 100% überwachen und damit folgenschwere Mängelvermeiden.

Yarn ClearingIn a modern spinning mill around 1 million kilometers ofyarn can be produced daily. Fault-free yarns cannot bemade with the manufacturing technology of today.USTER ® QUANTUM 2 clearers measure 100% of the yarnonline on spinning or winding machines. They determinequality characteristics such as evenness, imperfections andhairiness and automatically eliminate disturbing faults orseparate bobbins which do not fulfill the requirements.The yarn clearer is the last point where quality can becontrolled in the manufacturing process.GarnreinigungIn einer modernen Spinnerei können täglich rund 1 MillionKilometer Garn produziert werden, wobei die heutigeProduktionstechnologie noch nicht so weit ist, absolutfehlerfreie Ware herzustellen.Der Garnreiniger USTER ® QUANTUM 2 überwacht auf denProduktionsmaschinen während des Spinn- und Spulprozesses100% des Garns. Er prüft Gleichmässigkeit, Fremdfasern undHaarigkeit und entfernt automatisch störende Garnfehler sowieBobinen, die nicht den Anforderungen entsprechen.Der Garnreiniger bildet den letzten Punkt im Herstellungsprozess,bei dem die Qualität nochmals abschliessendkontrolliert werden kann.Corporate Governance 15

Sales and MarketingVertrieb und MarketingThe textile industry crisis hit all markets but the severityof the impact varied from region to region.Whilst business in China remained relatively robust,the mid-Asian markets including India, Turkey,Bangladesh and Pakistan were particularly hard hit.This was primarily the effect of excess inventories,lack of trade financing constraining investments, andeconomic uncertainty delaying investments.Overall, sales in the Asian markets contributed 71.1%to total gross sales (2008: 66.1%), Europe and Americasgenerated 15.7% and 13.1% respectively (2008: 22.3%and 11.5%).Continued Penetration of ChineseMid-Market SegmentThe focal point of the Company’s strategy remainsthe expansion of the Asian market. The previous introductionof the USTER ® TESTER ME100 andUSTER ® HVI MF100 broadened the Group’s presencein the Chinese mid-market segment. With this firstoffering the Uster Group penetrated this marketand secured new business opportunities as thequality needs of new customers advance to moresophisticated instruments.At the Shanghaitex trade show the Company introducedthe USTER ® MN100, a fiber testing instrumentwhich measures neps in cotton fibers, specificallydesigned to the specific needs of the Chinese mid segment.In addition, the entire Zweigle product line waspresented and promoted as an integrated part of theUster Group’s wide-ranging offering.Besides the launch of new products marketing teamsworld-wide further developed the USTER ® ThinkQuality concept and message, introducing tools tothe industry enabling customers to enhance theirprofitability and competitive positioning.Die Krise in der Textilindustrie traf sämtliche Märkte,hingegen waren die einzelnen Regionen unterschiedlichstark betroffen. So zeigte sich das Geschäft inChina relativ robust, während die mittelasiatischenMärkte wie Indien, die Türkei, Bangladesch und Pakistanbesonders stark in Mitleidenschaft gezogenwurden. Hauptgrund dafür waren weiterhin vorhandenehohe Vorräte, das Ausbleiben von Projektfinanzierungensowie die wirtschaftliche Unsicherheit,welche die Marktteilnehmer veranlasste, Investitionenaufzuschieben.Insgesamt trugen die asiatischen Länder 71.1% zumGesamtbruttoumsatz bei (2008: 66.1%); auf Europaund Nordamerika entfielen 15.7% bzw. 13.1% (2008:22.3% bzw. 11.5%).Weitere Erschliessung des mittlerenMarktsegments in ChinaDie Expansion im asiatischen Markt bildet nach wievor die tragende Säule der Unternehmensstrategie.Durch die Einführung der Prüfsysteme USTER ®TESTER ME100 und USTER ® HVI MF100 baute dieGruppe ihre Präsenz im mittleren Segment des chinesischenMarktes aus. Mit diesem ersten Angebottrat die Uster-Gruppe in den Markt ein und erschlossneue Geschäftspotenziale, die sich aus den wachsendenQualitätsansprüchen neuer Kunden und der damiteinhergehenden Nachfrage nach fortgeschrittenerenPrüfsystemen ergeben.Auf der Fachmesse Shanghaitex stellte das Unternehmenmit USTER ® MN100 ein Prüfsystem für Unregelmässigkeitenin Baumwollfasern vor, das speziellauf die Anforderungen chinesischer Kunden im mittlerenSegment zugeschnitten ist. Zudem wurde dasZweigle-Produktsortiment erstmals als integrierterBestandteil des breit gefächerten Angebots der Uster-Gruppe präsentiert und beworben.Neben der Lancierung neuer Produkte arbeiteten dieMarketingteams auf der ganzen Welt an der Weiterentwicklungdes Konzepts der USTER ® Think Quality-Botschaft. Diese soll den Kunden und Industriepartnernverdeutlichen, mit welchen Systemen sie ihreRentabilität und Wettbewerbsposition verbessernkönnen.16 Uster Technologies Ltd | Annual Report 2009

Ongoing Customer EducationIn 2009 Uster Technologies Ltd was present at allmajor industry events world-wide. In addition, aspart of the USTER ® “Think Quality” approach, symposiumsand training sessions were held for severalthousand key customers world-wide. These meetingswith USTER ® experts concentrated on quality controltraining and support for all markets and segments.Training programs with a special emphasis on theChinese market were organized for Textile Technologyand Sales staff. In addition, based on intensivemarket research, the development of special applicationprograms was initiated to address the needs ofthe local Chinese textile producers.Laufende KundenweiterbildungUster Technologies AG war 2009 auf allen wichtigenFachmessen weltweit vertreten. Darüber hinaus wurdenim Rahmen des USTER ® -Konzepts „Think Quality“Symposien und Fortbildungsveranstaltungenfür mehrere tausend grosse Kunden abgehalten. ImMittelpunkt dieser Zusammentreffen mit USTER ® -Experten standen Schulungen im Bereich Qualitätskontrolleund der Support für alle Märkte undSegmente. Für Textiltechnologen und Vertriebsmitarbeitendewurden Schulungsprogramme mitbesonderem Schwerpunkt auf dem chinesischen Marktveranstaltet. Zusätzlich wurde nach intensiver Marktforschungdie Entwicklung spezieller Anwendungsprogrammeinitiiert, die an die Bedürfnisse lokalerchinesischer Textilhersteller angepasst sind.Sales and Marketing | Vertrieb und Marketing 17

The hidden cost of poor qualityThin places in yarns may not stand up to multiple washingcycles leading to the formation of a hole – a hole in a fabricmay not only be caused by careless use.Even with a low-cost item such as a tea-towel there is anexpectation of a minimum standard of quality. When thatexpectation is not met, the customer does not return theproduct and may never go back to the retailer again. A hiddencost of quality as the retailer may lose a loyal customer.A yarn needs predefined quality characteristics to avoidthese problems occurring. For this purpose the yarn qualitycan be profiled with benchmarks.Die versteckten Kosten vonschlechter QualitätLöcher im Gewebe sind nicht unbedingt die Folge von unsorgfältigemGebrauch. Löcher können auch durchDünnstellen im Garn – insbesondere bei mehreren Waschgängen– entstehen.Selbst bei einem kostengünstigen Produkt wie bei einemGeschirrhandtuch erwartet der Käufer minimale Qualitätsstandards.Werden seine Erwartungen nicht erfüllt, bringt erdas Produkt vielleicht nicht zurück, wird wohl aber nichtmehr im gleichen Geschäft einkaufen, wodurch der Händlereinen treuen Kunden und zukünftige Einnahmen verliert.Anhand von vordefinierten Qualitätskriterien ist es möglich,solche Qualitätsprobleme zu vermeiden. Die Garnqualität wirdzu diesem Zweck mittels Referenzwerten genau überprüft.

Fabric Quality AssuranceUSTER ® STATISTICS are the recognized standard for qualitybenchmarking worldwide and represent the basis for thespecification of yarn trade contracts and for the definition of fiberand yarn quality characteristics. In commercial textile transactionsthey are also a powerful tool that can be used to specify theproperties of a yarn through a “Quality Profile”.From a mill management perspective “Total Testing” becomes areality through a unique combination of USTER ® TESTER valueswith USTER ® QUANTUM and USTER ® STATISTICS.GewebequalitätssicherungUSTER ® STATISTICS sind weltweit anerkannte Qualitätsreferenzwerteund bilden die Grundlage für die Spezifi kation bei Garnhandelsverträgenund für die Definition der Qualitätsmerkmalevon Fasern und Garnen. Für den Textilhandel stellen sie einewertvolle Referenz dar, um die Garneigenschaften anhand einesQualitätsprofils eindeutig festzulegen.Dank der einzigartigen Kombination des Mehrwerts vonUSTER ® TESTER, USTER ® QUANTUM und USTER ® STATISTICSwird für Spinnereien ein „Total Testing“ möglich. Corporate Governance 19

Research and InnovationForschung und EntwicklungThe Uster Group is committed to continue investingaround 10% of total sales in R&D. In 2009 expensesfor R&D amounted to CHF 11.0 million, correspondingto 10.9% of sales (2008: CHF 19.9 million; 12.8%).Technology Center Uster: Core ProductDevelopments and Enhanced Sensor TechnologyDuring the reporting period the R&D team in Usterconcentrated on core product projects, includinghardware and software developments. Special attentionwas given to streamlining the work flows withthe other two Technology Centers in Knoxville(USA) and Suzhou (China) as well as to the harmonizationof the development processes. In addition theteam continued to enhance sensor development capabilitiesas a core competence of USTER ® ’s productoffering.Technology Center Knoxville: Focus on NewHVI Components and Instruments for the ChineseMid SegmentThe emphasis on classing projects continued withthe development of new modules for future generationsof HVI fiber testing systems that fulfilled requirementsfor further automation to achieve higherefficiency as well as addressing specific applicationneeds.Furthermore the Technology Center’s resources focusedon design and deployment of new instrumentsfor the Chinese mid segment market, acceleratingthe R&D cycles for the new fiber testing systemsUSTER ® HVI MF100 and USTER ® MN100, and thesoon to be launched USTER ® ML100, which measuresfiber length.Die Uster-Gruppe hat sich das Ziel gesetzt, weiterhinrund 10% des Gesamtumsatzes in F&E zu investieren.2009 beliefen sich die F&E-Aufwendungenauf CHF 11.0 Mio. Dies entspricht einem Umsatzanteilvon 10.9% (2008: CHF 19.9 Mio.; 12.8%).Technologiezentrum Uster: Entwicklung vonKernprodukten und optimierte SensortechnologieWährend des Berichtszeitraums konzentrierte sichdas F&E-Team in Uster auf Projekte im Zusammenhangmit Kernprodukten, einschliesslich Hardware-und Software-Entwicklungen. Ein besonderesAugenmerk galt der Harmonisierung der Arbeitsabläufemit den anderen beiden Technologiezentrenin Knoxville (USA) und Suzhou (China) sowie dieAngleichung der Entwicklungsprozesse. Ferner arbeitetedas Team an weiteren Verbesserungen imBereich der Sensorentwicklung als Kernkompetenzdes USTER ® -Produktangebots.Technologiezentrum Knoxville: Schwerpunkt aufHVI-Komponenten und Systemen für das mittlerechinesische MarktsegmentDer Fokus auf Klassierungsprojekte setzte sich mitder Entwicklung neuer Module für künftige Generationenvon HVI-Faserprüfsystemen fort. Sie erfüllenden Wunsch nach höherer Effizienz durch weitereAutomation und berücksichtigen anwendungsspezifischeAnforderungen.Des Weiteren beschäftigte sich das Technologiezentrummit der Konzeption und Entwicklung neuerSysteme für das mittlere chinesische Marktsegment,der Verkürzung der F&E-Zyklen für dieneuen Faserprüfsysteme USTER ® HVI MF100 undUSTER ® MN100 sowie dem kurz vor der Markteinführungstehenden System USTER ® ML100, welchesdie Faserlänge misst.20 Uster Technologies Ltd | Annual Report 2009

Technology Center Suzhou: OngoingOffering to Local MarketsThe R&D team in Suzhou, with extended supportand dedicated coaching provided by the Group’sTechnology Centers in Uster and Knoxville, continuedto concentrate its efforts on the development ofa new generation of the online sliver quality monitoringsystem USTER ® SLIVERGUARD.Technologiezentrum Suzhou: Ausbau desAngebots für lokale MärkteDas F&E-Team in Suzhou konzentrierte seine Tätigkeit– mit umfangreicher Unterstützung und engagierterHilfestellung durch die Technologiezentrenin Uster und Knoxville – weiterhin auf die Entwicklungdes USTER ® SLIVERGUARD, eines hochmodernenOnlinesystems zur Überwachung der Qualitätder Bänder.Research and Innovation | Forschung und Entwicklung 21

OperationsProduktion und LogistikIn the challenging market environment of the financialyear 2009 Uster Technologies Ltd profited fromits flexible and lean business model and its close andlong-standing customer relations. In view of themarket turmoil and the sharp economic downturnthe Uster Group’s employees and many businesspartners, including key suppliers, were willing to“share the burden” of the crisis, allowing the Groupto effectively maintain its highly flexible and leancost base. In particular the employees supported allmeasures to keep costs under control and displayedthe utmost flexibility whilst maintaining all servicesto the customers.In the reporting period Uster Technologies Ltdachieved further progress in raising operational efficiency.The Group continued to develop its SupplyChain Management globally and source materialsfrom low-cost countries. In parallel, all TechnologyCenters worked in joint projects with their extensivenetwork of outsourcing partners world-wide to optimizework flows and processes to achieve improvedefficiency levels. The result of these efforts allowedmanagement – even in the challenging market environmentof the past year – to adjust resources quicklyto fluctuating demand in the textile industry.Integration of the Zweigle Product LineFollowing the acquisition of the Zweigle productrange in May 2009, the entire product line, includingcomponent stocks and process know-how, wasintegrated into the USTER ® operations. This processincluded the review of technical documentsand their integration into the USTER ® ProductData Management system. In addition the supplychain for the Zweigle products was reorganizedand became an integrated part of the Group’s GlobalSourcing Organization. In addition the USTER ®specialists verified and ensured the reproducibilityof the measurements, modified the sales and servicedocuments, and provided training for the salespersonnel.In der angespannten Marktsituation des Geschäftsjahres2009 profitierte Uster Technologies AG vonihrem flexiblen, schlanken Geschäftsmodell und ihrenengen langjährigen Kundenbeziehungen. Angesichtsder Turbulenzen am Markt und des deutlichenKonjunkturrückgangs zeigten sich die Mitarbeitendender Uster-Gruppe und viele Geschäftspartner,darunter wichtige Lieferanten, bereit, die Last derKrise gemeinsam zu tragen, so dass die Gruppe ihrehöchst flexible und schlanke Kostenstruktur wirksamaufrechterhalten konnte. Insbesondere die Mitarbeitendenunterstützten alle Kostensenkungsmassnahmenund zeigten äusserste Flexibilität, so dass eszu keinen Einbussen bei der Servicequalität gegenüberden Kunden kam.Im Berichtszeitraum erzielte Uster Technologies AGweitere Fortschritte bei der Erhöhung der betrieblichenProduktivität. Die Gruppe fuhr fort, ihr globalesSupply-Chain-Management weiterzuentwickelnund bezog vermehrt Materialien aus Niedrigkostenländern.Gleichzeitig arbeiteten die Technologiezentrenin Gemeinschaftsprojekten mit ihrem umfangreichenNetzwerk weltweiter Outsourcing-Partnerdaran, Produktivitätssteigerungen durch optimierteArbeitsabläufe und -prozesse zu erzielen. Infolgedieser Initiativen war die Geschäftsleitung – selbstunter den schwierigen Rahmenbedingungen desvergangenen Jahres – in der Lage, die Ressourcenschnell an die schwankende Nachfrage in der Textilindustrieanzupassen.Integration des Zweigle-ProduktsortimentsNach der Übernahme des Zweigle-Produktsortimentsim Mai 2009 wurde die gesamte Produktlinie, einschliesslichKomponentenbestände und Prozess-Know-how, in den Geschäftsbetrieb von USTER ®integriert. Hierzu gehörte unter anderem eine Durchsichtder technischen Unterlagen und ihre Integrationin das USTER ® -Produktdatenverwaltungssystem.Darüber hinaus wurde die Lieferkette für die Zweigle-Produkte neu organisiert und in die globale Beschaffungsorganisationder Gruppe eingebunden. Fernerprüften und gewährleisteten die USTER ® -Spezialisten22 Uster Technologies Ltd | Annual Report 2009

Flexible Resources and Material ManagementThe operational measures to adjust the cost base ofthe Group to lower demand, approved by the Board ofDirectors in November 2008, were fully implementedand effective as of March 2009. The reorganizationprogram included a 10% reduction of the world-wideworkforce as well as a short-time work program in theUster Technology Center. In addition a group-widecost saving program was initiated, designed to keepongoing expenditures at a minimum.Since materials account for a major part of the Group’sproduct costs, assessing supplier performance andevaluating potentially new suppliers remained a keytask. Uster Technologies Ltd continued to develop itsGlobal Sourcing Organization, focusing on the identificationof synergies among the Technology Centersby bundling purchase volumes and prioritizing partnersserving all Technology Centers. In this projectthe Technology Center in Suzhou played a key role byidentifying and developing high quality and cost competitivesuppliers. In parallel, Uster Technologies Ltdintensified its efforts to source parts and componentsfrom low cost countries.Managing and leveraging the impact of the marketdown-turn on the whole supply chain representedanother major challenge in the reporting period. TheUSTER ® staff successfully met the demands of thevolatile market environment by minimizing excessstocks and avoiding obsolete material whilst retainingthe flexibility to process orders at short notice.die Reproduzierbarkeit der Messungen, modifiziertendie Verkaufs- und Wartungsdokumente und schultendie Vertriebsmitarbeitenden.Flexibles Ressourcen- und MaterialmanagementDie vom Verwaltungsrat im November 2008 beschlossenenoperativen Massnahmen zur Anpassung derKostenbasis der Gruppe an die geringere Nachfragewurden vollständig umgesetzt und sind seit März 2009wirksam. Das Reorganisationsprogramm umfassteeine Reduzierung der weltweiten Belegschaft um 10%sowie Kurzarbeit im Technologiezentrum Uster. Zudemist ein konzernweites Kostensenkungsprogrammdarauf ausgerichtet, die laufenden Ausgaben zu minimieren.Da das Material einen Grossteil der Produktionskostender Gruppe ausmacht, zählt die Bewertung derLieferantenleistung und die Identifizierung potenziellerneuer Lieferanten weiterhin zu den wichtigstenAufgaben. Uster Technologies AG baute dieglobale Beschaffungsorganisation weiter aus, diesich darauf konzentriert, durch die Bündelung vonEinkaufsvolumen und die Auswahl bevorzugter Lieferantenfür alle Technologiezentren, Synergien zuerzielen. Bei diesem Projekt war das Technologiezentrumin Suzhou massgeblich an der Identifizierungund Entwicklung qualitativ hochwertiger und kostengünstigerLieferanten beteiligt. Parallel dazu intensivierteUster Technologies AG ihre Bemühungen,Teile und Komponenten aus Niedrigkostenländernzu beziehen.Die Auswirkungen des Konjunktureinbruchs auf diegesamte Lieferkette zu bewältigen und für das Unternehmenzu nutzen, bildete eine weitere anspruchsvolleAufgabe im Berichtszeitraum. Die USTER ® -Mitarbeitenden agierten erfolgreich im volatilenMarktumfeld, indem sie Überbestände minimierten,überzähliges Material vermieden und gleichzeitigdie Flexibilität wahrten, kurzfristige Aufträge zubearbeiten.Operations | Produktion und Logistik 23

OutlookAusblickSeveral trends and leading market indicators signaleda bottoming out of the downturn by the second halfof 2009. This was largely attributable to the economicstimulus programs deployed by various countries,which positively impacted consumer spendingin Western and Asian major markets, backed by therelative strength of the Chinese textile market as wellas the reduction in yarn oversupply. Other markettrends expected in 2010 are:• Improvement in the Indian market as higher cottonand yarn prices along with increased export demandraise manufacturers’ interest in quality raw materials,raising profitability levels in this market;• Continued upgrading of outdated low efficiencymachinery in the Asian market as labor cost increasesstart to play a crucial role;• Increasing efforts in cotton producing countries tomaximize profit opportunities by investing in cottonclassification instrumentation.Following a challenging financial year 2009, in whichthe fortunes of the textile industry were affected bythe world-wide economic downturn, producers focusedon securing their operational business andaugmenting their liquidity rather than investing inproducts for quality measurement and certifications.However, with an improvement of the market environmentin the second half, an upturn in demandfor quality improvements that enable them tostrengthen their competitiveness and thereby growtheir businesses has been observed. As a second importantfactor, conditions of credit and trade financinghave improved as well. As a consequence, theneed to build up new inventories as well as the executionof previously postponed investment planswill revitalize the industry, enabling markets to pickup in the mid-term and gradually bringing volumesback to levels seen in 2007.Im zweiten Halbjahr 2009 waren mehrere Trends undFrühindikatoren erkennbar, die auf das Erreichen desTiefpunktes der Talfahrt hindeuteten. Dies war vorallem auf die Konjunkturprogramme in verschiedenenLändern zurückzuführen, die das Konsumverhaltenin den grossen westlichen und asiatischen Märktenpositiv beeinflussten. Hinzu kamen die relative Stärkedes chinesischen Textilmarktes sowie der Abbaudes Überangebots bei Garn. Als weitere Markttrendswerden für 2010 erwartet:• Verbesserung der Lage am indischen Markt, daaufgrund höherer Baumwoll- und Garnpreise undder höheren Exportnachfrage das Interesse derHersteller an hochwertigen Rohstoffen wächst.Dies wird das Profitabilitätsniveau in diesem Marktanheben.• Fortsetzung des Trends der Aufrüstung veralteterineffizienter Maschinen im asiatischen Markt, dadie höheren Personalkosten eine immer wichtigereRolle spielen.• Zunehmende Bestrebungen in baumwollproduzierendenLändern, ihr Gewinnpotenzial durchInvestitionen in Baumwollklassierungssysteme zumaximieren.In Anbetracht der schwierigen Rahmenbedingungenim Geschäftsjahr 2009, in dem die Textilindustrie denweltweiten Konjunkturrückgang deutlich spürte,konzentrierten sich die Hersteller auf die Sicherstellungihres operativen Geschäfts und die Erhöhungihrer Liquidität, anstatt in Produkte für Qualitätsmessungenund Zertifizierungen zu investieren. Mitder Entspannung der Marktsituation im zweiten Halbjahrwar hingegen ein Anstieg der Nachfrage nachQualitätsverbesserungen zu beobachten, die es denHerstellern ermöglicht, ihre Wettbewerbsfähigkeitzu stärken und dadurch weiter zu wachsen. Als zweiterwichtiger Faktor haben sich die Bedingungen fürKredit- und Handelsfinanzierungen ebenfalls verbessert.Infolgedessen wird die Notwendigkeit, neueLagerbestände aufzubauen und die aufgeschobenenInvestitionspläne zu realisieren, die Industrie wiederbeleben,so dass mittelfristig eine Rückkehr derMärkte zum Umsatzniveau von 2007 möglich ist.24 Uster Technologies Ltd | Annual Report 2009

Positioned for Growth in a RecoveringMarket EnvironmentLooking forward, Uster Technologies Ltd will continueto strengthen its market position by continuingits high investments in product and marketdevelopment. A special focus in 2010 will be on takingadvantage of synergies and joint business developmentopportunities offered by the partnershipwith Toyota Corporation Industries. Both companies,Uster Technologies Ltd and the Textile MachineryDivision of Toyota, have leading market positionsand a combined product portfolio that offers a broadcoverage of many of the stages in the textile manufacturingprocess. In addition there are synergiesregarding distribution channels as well as opportunitiesfor joint technology development and marketinitiatives.At the same time the Group will seize attractivebusiness opportunities with the potential to increasethe added value of its products, thereby optimizingcustomers’ production efficiency, minimizingwaste, and reducing their costs.Aufgestellt für Wachstum, wenn sich derMarkt erholtMit Blick in die Zukunft wird Uster Technologies AGihre Marktposition durch fortgesetzte hohe Investitionenin Produkt- und Markterweiterungen weiterstärken. Ein besonderer Schwerpunkt für 2010 ist dieNutzung von Synergien und gemeinsamen Geschäftsentwicklungsmöglichkeiten,die sich durch die Partnerschaftmit Toyota Corporation Industries eröffnen.Beide Unternehmen, Uster Technologies AG und dieTextile Machinery Division von Toyota, besitzen führendeMarktpositionen und ein Produktportfolio, dasin seiner Kombination weite Teile des Textilherstellungsprozessesabdeckt. Zudem bestehen Synergienim Hinblick auf die Vertriebskanäle sowie Möglichkeitenfür gemeinsame Technologieentwicklungs- undMarktinitiativen.Gleichzeitig wird die Gruppe nach attraktiven GeschäftsmöglichkeitenAusschau halten, die den Mehrwertder bestehenden Produkte steigern und somitden Kunden ermöglichen, effizienter zu produzieren,Ausschuss zu minimieren und Kosten zu senken.Outlook | Ausblick 25

Corporate GovernanceThe information disclosed in this section follows the Directive on Information Relating to Corporate Governanceissued by the SIX Swiss Exchange and complies largely with the Swiss Code of Best Practice for CorporateGovernance issued by Economiesuisse. Uster Technologies Ltd has implemented these principles of good corporategovernance in its articles of association, its organizational rules and its code of conduct.All information shown in this section applies to the balance sheet date if not indicated otherwise. Significantchanges between the balance sheet date and the copy deadline of the annual report are listed under “10 MaterialChanges since the Balance Sheet Date” at the end of this section.Further information on Corporate Governance can be found by visiting Uster Technologies Ltd’s website atwww.uster-investors.com/governance.php.1 Group Structure and Shareholders1.1 Group Structure1.1.1 Operational StructureThe operational structure of the Uster Group is illustrated below:Board of Directors5 membersChairman Max-Ulrich ZellwegerExecutive Committee9 membersCEO Geoffrey ScottFinance and SupportCFOThomas F. DressendörferU.S. OperationsHossein GhorashiSales and ServiceHarold HokeAsian OperationsNaiming WeiTextile TechnologyRichard FurterOrder FulfillmentRenato MurkResearch and InnovationRafael StorzMarketing and BusinessDevelopmentDeniz Bütüner26 Uster Technologies Ltd | Annual Report 2009

1.1.2 Listed Companies within the GroupUster Technologies Ltd, Uster, Switzerland, is the parent company of the Uster Group and has been listedaccording to the Main Standard of the SIX Swiss Exchange since October 19, 2007. It is the sole listed companywithin the Group.Market capitalization CHF 225,882,000SIX Swiss ExchangeUSTNSwiss Security Number 3433153ISINCH00343315351.1.3 Non-Listed Companies within the GroupThe table below shows an overview of the non-listed companies of the Uster Group as of December 31, 2009:Company% Capital ShareholdingsDec 31, 2009Share Capital in 1,000Uster Technologies de Mexico S.A. de C.V.(Tlalnepantla, MX) 100% MXN 6,250Uster Technologies GmbH(Neuss, DE) 100% EUR 26Uster Technologies (India) Pvt. Ltd(Bangalore, IN) 100% INR 4,950Uster Technologies K.K.(Osaka-fu, JP) 100% JPY 10,000Uster Technologies (Shanghai) Co. Ltd(Shanghai, CN) 100% CNY 1,660Uster Technologies (Suzhou) Co. Ltd(Suzhou, CN) 100% CNY 20,185Uster Technologies Sulamericana Ltda.(Alphaville-Barueri SP, BR) 100% BRL 650Uster Technologies (Thailand) Ltd(Bangkok, TH) 100% THB 6,000Uster Technologies Holding (Thailand) Ltd(Bangkok, TH) 100% THB 1,000Uster Technologies, Inc.(Knoxville, US) 100% USD 100Uster Teknoloji Ticaret A.S.(Istanbul, TR) 100% TRY 501.2 Significant ShareholdersAs of December 31, 2009, 1017 shareholders (2008: 966) were registered in the share register of Uster TechnologiesLtd. In the course of 2009 the following disclosure announcements were made according to art.20 f. BEHG:• February 2, 2009 (SHAB Publication): Geoffrey Scott, CH-Zollikon, increased his holding in the Company’sshare capital on January 27, 2009, to 203,000 shares corresponding to 3.09 voting rights.• November 5, 2009 (SHAB Publication): Following the Company’s increase in share capital as of November2, the stake owned by Geoffrey Scott (meanwhile moved to CH-Erlenbach) decreased to less than 3%of voting rights.Corporate Governance 27

• On February 10, 2009, Lombard Odier Darier Hentsch Fund Managers SA (LODHFM), CH-Geneva, announcedit held as of February 2, 2009, through the funds LODH Swiss Caps, LODH Swiss Capital Leaders, IF IST 2Actions Suisse Valeurs Complémentaires and LODH Opportunity Swiss Small and Mid Caps, 454,856 sharescorresponding to 6.93% of voting rights. Less than 3% of this stake in the Company’s share capital was ownedby the fund LODH Swiss Caps. Further announcements altered these amounts:• May 8, 2009: LODHFM 7.26%, LODH Swiss Caps 3.15%• August 21, 2009: LODHFM 5.67%, LODH Swiss Caps under 3%• October 16, 2009: LODHFM 4.9%• March 10, 2009 (SHAB Publication): Marc Bär, CH-Zurich, announced that as of December 23, 2008, he directlyheld 247,435 shares representing 3.77% of voting rights.• On March 25, 2009, Balfidor Fondsleitung, CH-Basel, announced that it acquired on March 18, 2009, 205,367shares corresponding to 3.13% of voting rights.• November 14, 2009, Balfidor notified that following the Company’s increase in share capital as of November2, 2009, the stake owned by the fund decreased to less than 3% of voting rights.• May 13, 2009 (SHAB Publication): Polar Capital LLP, GB-London, announced that as of May 8, 2009, it decreasedits holding in the Company’s share capital to less than 3% of voting rights.• November 5, 2009 (SHAB Publication): Toyota Industries Corporation, JP-Aichi, acquired as of October 30,2009, 1,900,00 shares corresponding to 22.46% of voting rights after the Company’s increase in share capitalas of November 2, 2009.• November 11, 2009, Alcide Limited, St. Helier, Channel Islands, notified that following the Company’s increaseof share capital as of November 2, 2009, its holding in total outstanding shares decreased to less than30% to 2,358,377 shares corresponding to 27.88% voting rights. Alcide Limited is indirectly held by APEF 5– PULSAR CI L.P., JE-St. Helier; APEF 5 – PIXY US L.P., JE-St. Helier; APEF 5 – SYMA US L.P., JE-St. Helier;APEF 5 – KUMA CI L.P., JE-St. Helier; APEF 5 – IZAR CI L.P., JE-St. Helier; ZEBRA S.C., FR-Houilles, APEF 5– JABBAH CI L.P., JE-St. Helier.The following major shareholders owned more than 5.0% of the share capital of Uster Technologies Ltd asat December 31, 2009:• Alcide Ltd, St. Helier, Channel Islands, 27.9%• Toyota Industries Corporation, 22.5%1.3 Cross-ShareholdingsUster Technologies Ltd does not have any cross-shareholdings with other companies.28 Uster Technologies Ltd | Annual Report 2009

2 Capital Structure2.1 Ordinary Share CapitalThe ordinary share capital of Uster Technologies Ltd as of December 31, 2009, amounted to CHF 79,524,000and was fully paid up. It consisted of 8,460,000 registered shares with a nominal value of CHF 9.40 each.2.2 Authorized and Conditional Share CapitalAs of December 31, 2009, Uster Technologies Ltd had no authorized share capital.As of December 31, 2009, Uster Technologies Ltd had a conditional share capital, pursuant to which the sharecapital may be increased by a maximum aggregate amount of CHF 3,008,000 through the issuance of amaximum of 320,000 fully paid registered shares with a nominal value of CHF 9.40 each by the exercise ofoption rights which the employees, the management or directors of Uster Technologies Ltd or another Groupcompany may be granted in the future. The preemptive rights of the shareholders are excluded.The acquisition of registered shares through the exercise of option rights and the subsequent transfer of theregistered shares are subject to the transfer restrictions mentioned under “2.6 Limitations on Transferabilityand Nominee Registrations”.2.3 Changes in Share CapitalDec 31, 2009 Dec 31, 2008Ordinary share capital 79,524,000 61,664,000Authorized share capital - 8,930,000Conditional share capital 3,008,000 3,008,000On November 2, 2009, the ordinary share capital was increased from CHF 61,664,000 to CHF 79,524,000 bythe issuance of 1,900,000 registered shares with a nominal value of CHF 9.40 each. The new shares were issuedfrom the Company’s authorized share capital to Toyota Industries Corporation at a price of CHF 23.09per share, representing a premium of 10% over the volume-weighted average share price of the last 30 tradingdays prior to the capital increase.On June 13, 2008, a dividend payment by way of nominal value reduction of CHF 0.60 reduced the ordinaryshare capital by CHF 3,936,000 to CHF 61,664,000.On October 18, 2007, the share capital was increased from CHF 45,600,000 to CHF 65,600,000 by the issuanceof 2,000,000 shares with a nominal value of CHF 10 each. Both the authorized and conditional share capitalincrease have been approved at the extraordinary Shareholders’ meeting on October 4, 2007.On December 18, 2006, the share capital was increased from CHF 37,600,000 to CHF 45,600,000 by the issuanceof 8,000,000 registered shares with a nominal value of CHF 1 each. On December 13, 2006, the sharecapital was increased from CHF 100,000 to CHF 37,600,000 by the issuance of 37,500,000 registered shareswith a nominal value of CHF 1 each.Corporate Governance 29

2.4 Shares and Participation Certificates2.4.1 SharesEach share has a nominal value of CHF 9.40 and each share recorded and registered under a shareholder’sname in the share register of Uster Technologies Ltd is entitled to one vote. There are no preferential rightsfor individual shareholders and all shareholders are entitled to equal dividends.On January 1, 2010, the new Swiss Federal Act on Intermediated Securities (FISA) became effective. UsterTechnologies Ltd created the uncertificated securities book (Wertrechtebuch) pursuant to art. 973c of theSwiss Code of Obligations. In addition the shares of Uster Technologies Ltd are registered with the SIX SISAG and will qualify as intermediated securities in accordance with the FISA.2.4.2 Participation CertificatesUster Technologies Ltd has not issued any participation certificates.2.5 Profit Sharing CertificatesUster Technologies Ltd has not issued any profit sharing certificates.2.6 Limitations on Transferability and Nominee Registrations2.6.1 Limitations on TransferabilityAcquirers of registered shares will be recorded in the share register as shareholders with the right to vote,provided they explicitly declare to have acquired these registered shares in their own name and for their ownaccount.2.6.2 Nominee RegistrationsNominees are persons or entities who do not expressly declare in the application form to hold the shares fortheir own account and with whom the Board of Directors has entered into the according contractual agreements.According to the articles of association, the Board of Directors may record nominees in the share register withvoting rights for shares up to a maximum of 3.0% of the outstanding nominal share capital. Shares held by anominee that exceed this limit are only registered in the share register with voting rights if such nominee declaresin writing to disclose name, address and shareholding of any person or legal entity for whose account itis holding 1.0% or more of the outstanding share capital.Legal entities and associations or other partnerships that are linked by capital, voting power, managementor in other manner as well as all persons, entities and partnerships that are acting in concert with a view tocircumvent the restrictions on nominee registration (especially as a syndicate) are deemed to be one nominee.2.7 Convertible Bonds and Warrants/OptionsUster Technologies Ltd has not issued any convertible bonds, warrants or options.30 Uster Technologies Ltd | Annual Report 2009

3 Board of Directors3.1 Members of the Board of DirectorsThe following information sets forth the name, year of birth, function, election and directorship term ofeach Member of the Board of Directors, all of whom except for Geoffrey Scott are non-executive directors,followed by a short description of each Member’s business experience, education and activities.Max-Ulrich Zellweger, Chairman of the Board of DirectorsMax-Ulrich Zellweger has been a Member of the Board of Directors of Uster Technologies Ltd since 2003 andis elected until 2010. Between 1987 and 1992 he was Area Manager Asia Pacific of Schindler Elevators Co. andin this function responsible for the subsidiaries and joint ventures of Schindler in China, Japan, India, HongKong and other Asian countries. He is now Managing Partner of Pacific Consult Ltd, a Zurich and Shanghaibased business consultant specialized on business development in Asia, established in 1992 by Max-UlrichZellweger with some partners. He frequently lectures on Asia-related topics at universities and ExecutiveMBA courses. Furthermore, he is Chairman of the Board of Directors of Fr. Sauter Holding AG and a Memberof the Board of Directors of Fr. Sauter AG, Bartec GmbH (Germany) and Pacific Consult Ltd. Max-UlrichZellweger holds a Masters degree in Mechanical Engineering of the Swiss Institute of Technology (ETH) inZurich. He was born in 1941 and is a Swiss citizen.Dr. Beat E. Lüthi, Vice-Chairman of the Board of DirectorsBeat E. Lüthi has been elected a Member of the Board of Directors of Uster Technologies Ltd in 2008 for aperiod of three years until 2011 and holds office of Vice Chairman. He acts as CEO of CTC Analytics Ltd, aleading mid-sized Swiss Laboratory Instrument Company in the field of chromatography automation. From2003 until 2007 he headed the Laboratory Division of Mettler-Toledo. From 1998 to 2002 he was CEO of Feintool,a listed fine blanking company. From 1990 to 1998 he held various management positions at Mettler-Toledo. He is a member of the Board of Directors of Bossard, Stadler Rail and Addex Pharma. Beat E. Lüthiholds a PhD and graduated in Electrical Engineering from the Swiss Federal Institute of Technology (ETH)in Zurich. He absolved a Senior Management Program at INSEAD, Paris. He was born in 1962 and is a Swisscitizen.Dr. Barry James Mulady, Member of the Board of DirectorsBarry James Mulady has been a Member of the Board of Directors of Uster Technologies Ltd since 2003 andis elected until 2012. He has been Chairman of PageOne Communications Ltd, London, England, since 2000and is Chairman of ipTEST Ltd, Guildford, England. From 2000 to 2006, he served as a non-executive Directorof Tellermate plc, Newport, Wales and Sensima Ltd, London. From 1996 to 1999 he was CEO of Airtechplc, Aylesbury, England. Prior to that he served as President of Fisons Instruments Europe and CEO of VGInstruments plc. He has broad experience in general management, mergers and acquisitions and businessdevelopment. Barry James Mulady earned a First Class Honours Degree in Physics and a PhD in NuclearMagnetic Resonance from the University of Nottingham. He was born in 1947 and is a British citizen.Corporate Governance 31

Board of DirectorsMembers of the Board of DirectorsMax-Ulrich Zellweger1941, SwissChairmanElected in: 2003Elected until: 2010Beat E. Lüthi1962, SwissVice-ChairmanElected in: 2008Elected until: 2011Barry James Mulady1947, BritishMemberElected in: 2003Elected until: 2012Harald Rönn1960, GermanMemberElected in: 2007Elected until: 2011Geoffrey Scott1954, BritishMemberElected in: 2003Elected until: 201032 Uster Technologies Ltd | Annual Report 2009

Corporate Governance 33

Harald Rönn, Member of the Board of DirectorsHarald Rönn has been a Member of the Board of Directors of Uster Technologies Ltd since 2007 and is electeduntil 2011. Prior to joining Alpha Beteiligungsberatung GmbH & Co. KG in 1997 as a Managing Partner heworked at Hoechst Brazil, followed by Citicorp in New York and then Frankfurt in 1987. Harald Rönn movedin 1991 to 3i Frankfurt as a Manager. He holds a degree in Business Administration from the UniversityGetulio Vargas in Brazil and is fluent in German, English and Portuguese. He was born in 1960 and is aGerman citizen.Dr. Geoffrey Scott, Member of the Board of Directors and Chief Executive OfficerGeoffrey Scott has been a Member of the Board of Directors and CEO of Uster Technologies Ltd since 2003and is elected until 2010. He was Chief Executive Officer of the Zellweger Uster Division of Zellweger Luwa,Uster, Switzerland, from 1999 to 2003. Prior to that he held Senior Management positions at Kevex Instruments,Fisons plc (Scientific Instruments Division) and Beckman Instruments. He has broad experience ofstrategy and business development, sales, marketing and after-sales, product development and general management.He is a Member of the Board of Directors of Maillefer SA. Geoffrey Scott earned a BSc Honoursdegree in Biochemistry from the University of Liverpool, and a PhD in Biochemistry from the University ofNottingham. He was born in 1954 and is a British citizen.3.2 Independency of the Board of DirectorsNone of the non-executive Members of the Board of Directors has been a Member of the Executive Committeeof Uster Technologies Ltd or its subsidiaries during the past three years and there are no significantbusiness connections between Uster Technologies Ltd and its subsidiaries and the non-executive Membersof the Board of Directors.In his function of a Managing Partner of Pacific Consult Ltd Max-Ulrich Zellweger advises the Company oncertain business issues related to China. Also, Barry James Mulady delivers sometimes consulting servicesto the Company. However, the scope of these consultancy services is not significant.The Members of the Board of Directors do not have any activities and functions outside Uster TechnologiesLtd that would compromise their independency.34 Uster Technologies Ltd | Annual Report 2009

3.3 Elections and Terms of OfficeThe articles of association of Uster Technologies Ltd provide that the Board of Directors may consist of aminimum of three Members and a maximum of nine Members. Members of the Board of Directors are appointedand removed exclusively by shareholders’ resolution. The elections are held individually. Theirmaximum term of office is three years, re-election is allowed.3.4 Internal Organization3.4.1 Duties and Operating Principles of the Board of DirectorsThe Board of Directors is entrusted with the ultimate direction of Uster Technologies Ltd and the supervisionof the Executive Committee. The Board of Directors’ non-transferable and irrevocable duties include thefollowing:• The ultimate direction of the Company and the issuance of the necessary directives;• The determination of the organization, including the adoption and revision of the organizational rules;• The organization of the accounting system, the financial control as well as the financial planning;• The appointment and dismissal of the persons entrusted with the management of the Company as well asthe determination of the signatory power;• The ultimate supervision of the persons entrusted with the management of the Company;• The responsibility for the preparation of the annual report and the Shareholders’ meeting as well as theimplementation of the resolutions adopted by the meeting of Shareholders;• The passing of resolutions regarding the supplementary contribution for shares not fully paid up and ofthe corresponding amendments to the articles of incorporation;• The passing of resolutions concerning an increase in share capital to the extent that such power is vestedin the Board of Directors and of resolutions concerning the confirmation of capital increases and correspondingamendments to the articles of incorporation as well as making the required report on the capitalincrease;• The notification of the judge in case of over-indebtedness of the Company;• The adoption of and any amendments or modifications to any equity incentive plan, stock option agreement,restricted stock purchase agreement, etc.;• The decision regarding entering into any financing arrangement in excess of CHF 10.0 million includingloan agreements, credit lines, letters of credit or capitalized leases;• The issuance of convertible debentures with option rights or other financial market instruments;• The approval of the business strategy and the approval and adoption of the budget of the Company;• The approval of any transaction exceeding the amount of CHF 10.0 million which is not in accordance withthe budget.Corporate Governance 35

The Board of Directors may entrust some or several of its Members with the duty to prepare and carry out itsresolutions or to supervise certain matters.According to the current organizational rules enacted by the Board of Directors, the Board of Directors meetsat the invitation of the Chairman, or in the Chairman’s absence, the Vice-Chairman or any other Member ofthe Board of Directors, as often as the Company’s business requires a meeting and in any event at least sixtimes per calendar year. Resolutions of the Board of Directors are passed by way of simple majority of thevote cast. In the case of a tie the Chairman has a casting vote. To pass a resolution validly, the majority ofthe Members of the Board of Directors have to attend the meeting.The Chairman, after consultation with the Chief Executive Officer, determines the agenda for the Boardmeetings. Any Member of the Board of Directors may request the convocation of a meeting or the inclusionof items of business in the agenda. All Members of the Board receive written information on the agenda itemsbefore the meeting in order to be well prepared. The Board of Directors consults external experts wherenecessary when discussing specific topics.In 2009 the Board of Directors held the following meetings:Number of meetings: 8Average meeting time (hours): 4Attendance of Members of the Board of Directors (Meetings):Max-Ulrich Zellweger 8Beat E. Lüthi 8Barry James Mulady 8Harald Rönn 8Geoffrey Scott 83.4.2 Committees of the Board of DirectorsThe Board of Directors has established two committees to further strengthen the corporate governancestructure. The Members of these committees are appointed, as a rule, for the entire duration of their mandateas Director and are re-eligible. The committees constitute themselves each year at the first meeting after theannual meeting of shareholders. In discharging their responsibilities the committees have unrestrictedaccess to the Company’s and the Management’s books and records.Audit CommitteeAccording to the Board regulations, the Audit Committee must be composed of non-executive and independentDirectors. It currently consists of Max-Ulrich Zellweger, Beat E. Lüthi and Harald Rönn and meets asoften as necessary. Usually there will be at least two meetings a year, one for the review of the budget andone for the review of the year-end closing. Furthermore, the audit scope, the audit plan and the audit focuspoints for the year-end closing are presented in such meetings. The audit committee asks the auditors topresent their findings of the year-end closing. Other audit findings either by an external consultant or bythe internal audit team are presented on a case by case basis.36 Uster Technologies Ltd | Annual Report 2009

In 2009 the Audit Committee held the following meetings:Number of meetings: 2Average meeting time (hours): 1Attendance of Members of the Board of Directors (Meetings):Max-Ulrich Zellweger 2Beat E. Lüthi 2Harald Rönn 2The Audit Committee assists the Board of Directors in fulfilling its duties of supervision of the ExecutiveCommittee. It has the following powers and duties:• To review and assess the effectiveness of the statutory auditors, in particular their independence fromthe Company;• To review and assess the scope and plan of the audit, the examination process and the results of theaudit and to examine whether the recommendations issued by the auditors have been implemented;• To review the auditors’ reports and to discuss their contents with the auditors and with the ExecutiveCommittee;• To assess the risk assessment established by the Executive Committee and the proposed measures toreduce risks;• To assess the state of compliance with norms within the Company;• To review in cooperation with the auditors, the CEO and the CFO whether the accounting principles andthe financial control mechanism of the Company and its subsidiaries are appropriate in view of the sizeand complexity of the Group;• To review the annual and interim statutory and consolidated financial statements intended for publication.It should discuss these with the CEO, the CFO and with the head of the external audit;• The Audit Committee regularly reports to the Board of Directors on its findings and proposes appropriateactions.Corporate Governance 37

Nomination and Compensation CommitteeAccording to the Board Regulations, the Nomination and Compensation Committee must be composed ofnon-executive and independent Directors. It currently consists of Max-Ulrich Zellweger, Barry James Muladyand Harald Rönn and meets as often as necessary.In 2009 the Nomination and Compensation Committee held the following meetings:Number of meetings: 2Average meeting time (hours): 1Attendance of Members of the Board of Directors (Meetings):Max-Ulrich Zellweger 2Barry James Mulady 2Harald Rönn 2The Nomination and Compensation Committee assists the Board of Directors in fulfilling its duties ofsupervision of the Executive Committee. It has the following powers and duties:• To assure the long-term planning of appropriate appointments to the position of the CEO and to theBoard of Directors;• To nominate candidates to fill the vacancies on the Board of Directors or the position of the CEO;• To make recommendations on the composition and balance of the Board of Directors;• To review and assess on a regular basis the remuneration system of the Company and the Group (includingthe management incentive plans) and to make a proposal to the Board of Directors;• To recommend the terms of employment, in particular the remuneration package of the CEO, and tomake proposals in relation to the remuneration of the Members of the Board of Directors;• To recommend upon proposal of the CEO the terms of employment, in particular the remunerationpackage, of employees reporting directly to the CEO as well as review matters related to the compensationof other top managers as well as the general employee compensation and human resource practicesof the Company;• To make recommendations on the grant of options or other securities under any management incentiveplan of the Company.The Nomination and Compensation Committee regularly reports to the Board of Directors on its findingsand proposes appropriate actions.38 Uster Technologies Ltd | Annual Report 2009

3.4.3 Areas of ResponsibilitiesIn accordance with the law, the articles of incorporation and the organizational rules the Board of Directorshas delegated the Company’s operational management to Geoffrey Scott, the CEO of Uster Technologies Ltd.Together with the Executive Committee he is responsible for the overall management of the Uster Group.The CEO has all the powers and duties that are not explicitly reserved to the Board of Directors or a BoardCommittee as mentioned above. In particular, the CEO has the following powers and duties:• The provision of all information and documents necessary to the Board of Directors;• The implementation of the resolutions passed by the Board of Directors;• The organization, management and control of the day-to-day business of the Company;• The proposal to the Board of Directors for the approval of transactions to be resolved by the Board ofDirectors;• The proposal to the Board of Directors for the appointment and dismissal of Members of the ExecutiveCommittee;• The organization of the Executive Committee and the preparation, calling and presiding the meetingsof the Executive Committee.3.4.4 Information and Control MechanismsBoard of DirectorsThe Board of Directors recognizes the importance of receiving sufficient information from the ExecutiveCommittee to fulfill its supervisory duty and to make the decisions that are reserved to the Board of Directors.It has the following means to monitor the responsibilities it has delegated to the Executive Committee:• The CEO of the Group is a Member of the Board of Directors and informs the Board in every meeting aboutthe current development of the business. Additionally the CFO serves as the secretary of the Board andalso participates in every meeting. Other Members of the Executive Committee are invited to attendBoard meetings to report on their areas of responsibility as deemed necessary by the Board.• The minutes of the Executive Committee Meetings are made available to the Chairman of the Board.• Informal meetings are held as required between Board Members and the CEO.• The Board of Directors receives on a monthly basis the consolidated income statement, balance sheetand cash flow statement of the Uster Group together with a detailed comment on the course of the business.The Board of Directors does not have direct access to the Management Information System of theCompany.• Risk management and monitoring procedures are evaluated at regular intervals by the Board of Directors.Board CommitteesThe Board Committees, especially the Audit Committee, invite external consultants to review the businessand better understand the laws and policies impacting the Company. In addition the CEO, the CFO and therepresentative of the external auditors will be invited to the meetings of the Audit Committee.Corporate Governance 39

Executive CommitteeMembers of the Executive CommitteeGeoffrey Scott1954, BritishChief Executive OfficerMember since 2003Thomas F. Dressendörfer1958, GermanChief Financial OfficerMember since 2008Hossein Ghorashi1945, AmericanHead of U.S. OperationsMember since 2003Naiming Wei1962, GermanHead of Asian OperationsMember since 2006Richard Furter1943, SwissHead of Textile TechnologyMember since 2003Rafael Storz1967, GermanHead of Research andInnovationMember since 2006Deniz Bütüner1973, SwissHead of Marketing andBusiness DevelopmentMember since 2007Harold R. Hoke1954, AmericanHead of Sales and ServiceMember since 2003Renato Murk1956, SwissHead of Order FulfillmentMember since 200340 Uster Technologies Ltd | Annual Report 2009

Corporate Governance 41

4 Executive Committee4.1 Members of the Executive CommitteeThe following information sets forth the name, year of birth, nationality and function of each Member ofthe Executive Committee, followed by a short description of each Member’s business experience, educationand activities.Dr. Geoffrey Scott, Member of the Board of Directors and Chief Executive OfficerGeoffrey Scott has been a Member of the Board of Directors and CEO of Uster Technologies Ltd since 2003(elected until 2010). He was Chief Executive Officer of the Zellweger Uster Division of Zellweger Luwa, Uster,Switzerland, from 1999 to 2003. Prior to that he held Senior Management positions at Kevex Instruments,Fisons plc (Scientific Instruments Division) and Beckman Instruments. He has broad experience of strategyand business development, sales, marketing and after-sales, product development and general management.He is a Member of the Board of Directors of Maillefer SA. Geoffrey Scott earned a BSc Honours degree inBiochemistry from the University of Liverpool, and a PhD in Biochemistry from the University of Nottingham.He was born in 1954 and is a British citizen.Thomas F. Dressendörfer, Chief Financial Officer, Finance and SupportThomas F. Dressendörfer has been appointed to the CFO position of Uster Technologies Ltd as of October 1,2008. He takes responsibility to lead the Finance and Support Team in Uster, including IT, and reports asmember of the Executive Management Committee directly to the CEO. Thomas F. Dressendörfer has workedin the past years with Randstad, The Nielsen Company and Procter & Gamble, where he has been holdingvarious key senior finance positions. He brings extensive experience of leading high performing Financeteams as well as experience of working with Finance groups internationally. Thomas F. Dressendörfer holdsa Masters Degree in Business Administration and Economics from the University of Erlangen-Nurembergin Germany. He was born in 1958 and is a German citizen.Hossein Ghorashi, Head of U.S. OperationsHossein Ghorashi has been Head of U.S. Operations since 2003. From 1990 through 2002 he held the positionsof Senior Vice President of R&D and Head of Zellweger Uster Inc. He was with Special InstrumentsLaboratory from 1969 through 1989 and was Vice President of R&D for the last 10 years. He holds a BS andan MS in Electrical Engineering from the University of Tennessee, Knoxville TN, United States. He is acoinventor of 18 fiber testing patents, author of numerous papers and presents the Company’s latest innovationsin important international conferences. He is known and referred to as a cotton fiber testing expertworldwide. Hossein Ghorashi was born in 1945 and is an American citizen.42 Uster Technologies Ltd | Annual Report 2009

Dr. Naiming Wei, Head of Asian OperationsNaiming Wei has been a Member of the Management and Head of Asian Operations of Uster TechnologiesLtd since 2006. From 2000 to 2005 he was General Manager at Shanghai Sachs Huizhong Shock Absorber Co.Ltd, a joint venture company between the German automotive supplier ZF-Sachs Ltd and Shanghai AutomotiveIndustry Corporation. Prior to that, Naiming Wei worked as management consultant at ManagementEngineers GmbH for large and middle size multinational clients in Germany, in the UK and in Switzerland.From 1993 to 1997 he was Sales and Marketing Manager and Purchasing Manager at Siemens Ltd, BusinessDivision Private Communication Systems. Naiming Wei holds a Masters degree (Dipl.-Ing.) and a PhD degree(Dr.-Ing.) in Electrical Engineering from the University Erlangen-Nuremberg in Germany. He was born in1962 and is a German citizen.Richard Furter, Head of Textile TechnologyRichard Furter has been Head of Textile Technology of Uster Technologies Ltd since 2003. Prior to that hehas worked for Zellweger Uster Ltd since 1967 where he was an electronic engineer in R&D and was particularlyinvolved in sensor technology and signal processing. In this role he has filed various patents. RichardFurter held positions as Product Manager, Manager of R&D and Manager of Marketing and Sales. He is familiarwith the customers in the most important textile markets. Richard Furter graduated as an electronicengineer (currently Lucerne University of Applied Sciences and Arts). He was born in 1943 and is a Swisscitizen.Dr. Rafael Storz, Head of Research and InnovationRafael Storz has been a Member of the Management since 2006. From 2001 to 2006 he was a Member of theManagement and Head of R&D of Leica Microsystems CMS GmbH, Wetzlar, Germany. From 1998 to 2001 hewas a project manager and deputy head of the R&D department at Leica Microsystems Heidelberg GmbH,Germany. He is experienced within strategy and business development and product development. He is a(co-)inventor of 24 patents in the field of measurement equipment and analysis tools. Rafael Storz earned aPhD in Physics from the University of Konstanz, Germany. He was born in 1967 and is a German citizen.Deniz Bütüner, Head of Marketing and Business DevelopmentDeniz Bütüner has been a Member of the Management and joined Uster Technologies in 2007 as Vice PresidentMarketing. From 2003 to 2006 she was with Bombardier Transportation’s Propulsion and Controls Division,where she was responsible for the Division’s strategy, marketing and communication. Between 1998 and2002 she held marketing, business development and communications management positions with HyperionSolutions, MIS Technologies and Swisslog Management. Deniz Bütüner has extensive experience in strategy,business development and marketing. She is a Member of the Board of Directors of Marble & FortuneAG. Deniz Bütüner holds a Swiss Federal Diploma in Marketing Management. She was born in 1973 and is aSwiss citizen.Corporate Governance 43

Harold R. Hoke Jr., Head of Sales and ServiceHarold Hoke has been Head of Sales and Service of Uster Technologies Ltd since 2003. He rejoined UsterTechnologies Ltd in 2002 after almost two years as CEO of Savio America. Harold Hoke originally joinedZellweger Uster Ltd in 1980 in the U.S. operation. Since 1996 he was based in the Company’s headquartersand was responsible for Sales and Service Asia. Harold Hoke has substantial experience in sales, marketing,service, business development, production management and strategy development. Harold Hoke holds a BSfrom Clemson University. He was born in 1954 and is an American citizen.Renato Murk, Head of Order FulfillmentRenato Murk has been Head of Order Fulfillment of Uster Technologies Ltd since 2003, a position whichincludes the worldwide responsibility for the production processes and supply chain management. From1999 to 2003 he was responsible for production and logistics of the Zellweger Uster Division of ZellwegerLuwa Ltd. From 1996 to 1999, he was a Manager of Product Assembly Lines at Zellweger Uster. Renato Murkholds a Master of Industrial Engineering degree from the Swiss Federal Institute of Technology (ETH) withthe majors Process Engineering and Business Administration. Besides significant experience in general andproduction management he has executed several efficiency and cost-improving programs as a senior consultantin a Swiss-based management consultancy. He was born in 1956 and is a Swiss citizen.4.2 Other Activities and Vested InterestsThere are no further activities of vested interests of the Members of the Executive Management except theones mentioned above.4.3 Management ContractsThe Board of Directors has not delegated any management tasks to third parties outside the Company.5 Compensation, Shareholdings and Loans5.1 Content and Method of Determining the Compensation and the Share-Ownership ProgramsWith respect to the compensation the Nomination and Compensation Committee has the following responsibilities:• To review and assess on a regular basis the remuneration system of the Group including the incentive plansfor the Executive Committee and to make a proposal to the Board of Directors thereto;• To make recommendations with respect to the remuneration package of the CEO and the Directors;• To recommend upon proposal of the CEO the remuneration package of employees reporting directly to the CEO;• To make recommendations on the grant of options or other securities under any management incentiveplan. Based on these recommendations the Board of Directors approves the remuneration of the Membersof the Board of Directors and the Members of the Executive Committee.44 Uster Technologies Ltd | Annual Report 2009

Usually Uster Technologies Ltd does not adjust salaries during the year. Therefore the Nomination andCompensation Committee generally meets during the fourth quarter to discuss the remuneration packageof the Board Members and the Members of the Executive Committee for the following year. The CEO preparesa proposal by consulting different remuneration studies available on the market. This recommendation isdistributed to the Members of the Nomination and Compensation Committee before the meeting and servesas a basis for the discussion of the remuneration during the meeting. The CEO is partially present at themeeting but he has to leave when his remuneration is discussed. After the final decision on the remunerationof the Board Members and the Members of the Executive Committee by the Board of Directors the salarychanges are signed by a Member of the Board of Directors.The remuneration of the Members of the Board of Directors consists of an equal payment in cash for theordinary Board members. The remuneration for Chairman of the Board of Directors is determined by takinginto account his respective responsibility, experience and the time which he invests in his activity as Chairman.Extraordinary assignments or work which a Director accomplishes outside of his activity as a Directoris specifically remunerated. Such remuneration has to be approved by the Board of Directors. In additionthe Directors are reimbursed all reasonable cash expenses properly incurred by them in the discharge oftheir duties, including their reasonable expenses of traveling to and from the meetings of the Board ofDirectors, committee meetings and Shareholders’ meetings.The Members of the Executive Committee are remunerated according to the principle of flexible, performance-relatedcompensation. Their remuneration consists of a basic salary and a performance-related componentin the context of the bonus plan . The performance related compensation part amounts to max. 50%of the basic salary. The performance-related component is based on the gross sales and the operating earningsachieved by the Group (EBITA) as well as the individual goals amounting to max. 10% of total performancerelated compensation. All the components mentioned above are cash compensations.With the exception of a car, the Members of the Executive Committee do not have any additional benefits.There are no share-ownership programs or option plans with regard to the compensation of the Board ofDirectors and the Executive Committee.5.2 Compensation of the Members of the Board of Directors and the Executive CommitteeInformation on the compensation of the Board of Directors and the Executive Committee for the year endingDecember 31, 2009, are presented in the note 11 of the Financial Statements of Uster Technologies Ltd.6 Shareholders’ Participation6.1 Voting Rights and Representation RestrictionsDetails of restrictions on shareholders’ voting rights are given in the section entitled “2.6 Limitations onTransferability and Nominee Registrations” above.In a Shareholders’ meeting each share recorded as a share with the right to vote in the share register entitlesits owner to one vote. By means of a written proxy each shareholder may have his shares represented in aShareholders’ meeting by a third person who needs not be a shareholder. Shareholders who are recorded inthe share register with the right to vote at a certain date appointed by the Board of Directors are entitled toparticipate in the Shareholders’ meeting and to exercise the right to vote.No exceptions to these rules were granted by the Board of Directors in the year under review.Corporate Governance 45

6.2 Statutory QuorumsUnless mandatory statutory provisions provide otherwise, the Shareholders’ meeting passes its resolutionsand performs elections with the absolute majority of the votes represented at the meeting.If an election cannot be completed upon the first ballot and if there is more than one candidate, the Chairmanshall direct a second ballot at which the relative majority shall decide.6.3 Convocation of the Shareholders’ MeetingThe Shareholders’ meeting is called by the Board of Directors or, if necessary, the auditors not less than 20days before the date of the meeting. Notice of a Shareholders’ meeting is given by means of a single publicationin the Swiss Official Gazette of Commerce. The shareholders registered in the share register may inaddition receive a written notice sent by mail.An extraordinary Shareholders’ meeting is called whenever the Board of Directors or the auditors considerit necessary or if a Shareholders’ meeting decides so. The Board of Directors will also call a Shareholders’meeting if one or more shareholders whose combined holdings represent at least 10.0% of the share capitalso demand in writing and specify the items and the proposals, in the case of elections the names of the proposedcandidates, to be submitted to the meeting.6.4 AgendaShareholders whose individual or combined holdings represent an aggregate nominal value of at leastCHF 1,000,000 or at least 10.0% of the share capital may demand that an item be included in the agenda.This right must be exercised in writing at least 60 days before the meeting with indication of the itemsand the proposals of the shareholders.No resolution shall be passed on items for which no proper notice has been given; this prohibition doesnot apply to proposals to call an extraordinary Shareholders’ meeting, to initiate a special audit or to electthe auditors as demanded by a shareholder.No prior notice is required for proposals concerning items included in the agenda and discussions thatdo not result in the adoption of resolutions.6.5 Inscriptions into the Share RegisterAfter the publication or mailing of the written notice of the Shareholders’ meeting until the day followingthe Shareholders’ meeting no recordings in the share register will be made, provided that the Board ofDirectors does not appoint a different date.46 Uster Technologies Ltd | Annual Report 2009

7 Changes of Control and Defense Measures7.1 Obligation to Make an OfferAccording to the Federal Act on Stock Exchanges and Securities Trading a shareholder or a group of shareholdersacting in concert acquiring more than 33 1 / 3 % of the voting rights must submit a takeover offer toall remaining shareholders. The articles of association of Uster Technologies Ltd do not include any amendment(i. e. no opting-out or opting-up provision) to this rule.7.2 Clauses on Changes of ControlNeither the Members of the Board of Directors nor the Members of the Executive Committee have contractsthat provide for benefits upon termination of employment contracts due to a change of control.8 Auditors8.1 Duration of the Mandate and Term of Office of the Lead AuditorThe statutory auditors and Group auditors are elected by the Shareholders’ meeting. The term of officeof the auditors is one year, beginning with the day of their election and ending on the day of the nextordinary Shareholders’ meeting.Ernst & Young Ltd, Zurich, have been the auditors of the Group since 2003. They have been the statutoryauditors of Uster Technologies Ltd since its incorporation in November 2006. The auditor-in-charge, DanielZaugg, took up office in 2008.8.2 Auditing FeesIn the year under review, Ernst & Young Ltd invoiced CHF 0.5 million for their audit services.8.3 Additional FeesErnst & Young Ltd invoiced additional fees in the amount of CHF 0.4 million mostly related to tax consulting.8.4 Information Tools Pertaining to the External AuditThe Audit Committee monitors on behalf of the Board of Directors the performance and independence ofthe external auditors. In addition it reviews the audit result and monitors the implementation of the findingsby the Executive Committee.The Audit Committee prepares proposals for the appointment or removal of the external auditors forsubmission to the Board of Directors, which then nominates the external auditor for election by the Shareholders’meeting.Currently the Audit Committee is informed on the findings of the audit through the Management Letterissued by the auditors after the year-end audit, which is written after the year-end audit by the auditor.Corporate Governance 47

9 Information PolicyUster Technologies Ltd is committed to an open and clear information policy towards its shareholders aswell as its other stakeholders.The audited annual as well as unaudited semi-annual reports are available to the shareholders and otherstakeholders. The annual report is provided in printed form and both annual and semi-annual reports areavailable on the website under www.uster-investors.com/financial_reports.php. Additionally the public isinformed via the media of material current changes and developments. Events relevant for the share priceare published according to the ad-hoc publicity guidelines of the SIX Swiss Exchange.Media and analyst conferences are held at least once a year and the press releases as well as presentations areavailable on the website under www.uster-investors.com/news.php.Interested parties can subscribe to the mailing list available under www.uster-investors.com/subscription_service.php in order to receive ad-hoc publications or other recent information relating to the Company.Important DatesPublication of annual results 2009 March 1, 2010Media and analyst conference March 1, 2010Last day for inscription into the share registerMarch 19, 2010before the Shareholders’ meeting 2010Shareholders’ meeting 2010 March 30, 2010Semi-annual results 2010 July 20, 2010Contact for Media, Investors and AnalystsThomas F. Dressendörfer, CFOSonnenbergstrasse 10CH-8610 UsterPhone +41 43 366 36 06Fax +41 43 366 36 54Email investorrelations@uster.com10 Material Changes since the Balance Sheet DateThere are no material changes to the information stated in this section since the balance sheet date.48 Uster Technologies Ltd | Annual Report 2009

Uster Technologies Ltd | Financial Report 2009

Comment on the Consolidated Financial StatementsSummaryIn an uncertain and weak market environment Uster Technologies Ltd continued to deliver a solid performancein the 2009 financial year.EBITA reached CHF 22.7 million and margins remained strong at 22.5%, slightly above the previous year’slevel of 22.1%, despite lower sales.Key drivers for this strong EBITA margin are:• Convincing investment propositions for the entire USTER ® product range even in difficult markets;• A lean and flexible organizational structure allowing the Company to immediately adjust for revenue upanddownturns;• Significant overhead cost reductions as a result from the restructuring projects initiated in the fourthquarter 2008;• Invoicing with secured payment terms in CHF or USD for the majority of the products, reducing exchangerate gains/losses and receivables defaults to a minimum.The net result reached positive CHF 1.1 million or 1.1% of gross sales.The cash position was significantly improved through a capital increase of CHF 43.9 million with ToyotaIndustries Corporation as a new major strategic shareholder. The proceeds of this capital increase have beenmainly used to reduce debt and to invest into the business.Income StatementGross SalesGross sales for 2009 amounted to CHF 100.8 million, a decrease of 34.9% compared to the prior year figure ofCHF 154.9 million. The overall decline of gross sales for quality testing instruments and service sales is aresult of the current weak market environment coupled with the negative impact of the financial crisis.Furthermore, secured trade financing has been a key challenge for our customers in the emerging marketsimpacting the gross sales levels. Exchange rate gains/losses on sales have been held at about 1% of gross salesin 2009, mainly due to CHF/$ invoicing.EBITAEBITA for the Group amounted to CHF 22.7 million (2008: CHF 34.2 million). As a percentage of gross salesthe EBITA reached 22.5% (2008: 22.1%).Uster Technology Ltd’s lean and flexible business model together with the restructuring initiated inNovember 2008 allowed the Group to adapt quickly its operations to the major changes in the market demand.Furthermore, during the course of the year, the cost of goods sold and overhead costs were adapted accordingly,thereby securing a high EBITA margin comparable to the level of 2008.Balance SheetThe balance sheet total as of December 31, 2009, amounted to CHF 404.7 million (2008: CHF 409.8 million).This decrease of CHF 5.1 million compared to the previous year was a combination of i) amortization of theintangible assets of CHF 15.2 million (assets), ii) an increase in cash of CHF 7.6 million (assets), iii) loan repaymentsof CHF 40.0 million (liabilities), iv) reduction of deferred tax of CHF 8.3 million (liabilities) and v)Shareholder’s equity increase by CHF 44.1 million mainly as a result of the capital increase and the positivenet result (equity). The equity ratio increased to a strong 50.3% (2008: 38.9%).50 Comment on the Consolidated Financial Statements 2009

Impairment Test of Intangible Assets and GoodwillUster Technologies Ltd performs an impairment test on the goodwill and the intangible assets at least oncea year. The latest impairment test was performed in the fourth quarter of 2009 and was based on recentmarket developments, realistic internal assumptions and external input on key parameters. The impairmenttest confirmed the carrying amounts of the goodwill and related intangible assets.Bank LoansThe Group repaid CHF 40.0 million of bank loans with a maturity date in 2012 and met all loan covenants inthe financial year 2009. Free, not utilized credit facilities amount to CHF 20.0 million.Cash Flow StatementUster Technologies Ltd continues to have a strong focus on cash generation.The free cash flow was impacted by i) the lower sales levels (34.9% below 2008), ii) the onetime restructuringcosts paid out in the first half 2009 and iii) the higher amount of accounts receivables due to increasing OEMshipments in the fourth quarter of 2009. The majority of the cash flow generated by the increase in equityhas been used to deleverage the balance sheet by repaying part of the loan.Cash per December 31, 2009, improved by CHF 7.6 million to CHF 15.1 million (2008: CHF 7.5 million).Capital Expenditure for Intangible and Tangible AssetsCapital expenditure for intangible and tangible assets amounted to CHF -3.3 million (2008: CHF -3.7million). At a level of only 3.3% of gross sales this is low compared to market averages and is consumingonly 23% of the cash flow from operating activities. The main reason for this low capital expenditurerate is the consequent outsourcing of all non-core activities in line with the flexible business model ofUster Technologies Ltd.PersonnelAs of December 31, 2009, the Uster Group employed 449 full time equivalents (2008: 536) which is a decreaseof 16.2% compared to the prior year. This decrease resulted mainly from the Group-wide restructuring initiatedin November 2008 and implemented in the first quarter of 2009.TaxesThe expected income tax for the Uster Group is impacted by two components. The implementation of a“Prinzipal Struktur” taxation model effective as of 2008 has resulted in a significant liability decrease,more than offsetting a likely increase of prior year tax liabilities due to an ongoing tax audit.Dividend ProposalAt the General Meeting on March 30, 2010, the Board of Directors will propose to refrain from a dividendpayment for the 2009 financial year. This measure will enable Uster Technologies Ltd to ensure sufficientliquidity to invest into the business and to lower debt further.Comment on the Consolidated Financial Statements 2009 51

Uster Group – Consolidated Financial StatementsConsolidated Statement of Comprehensive Incomein CHF 1,000 Notes Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Gross sales 100,763 100.0% 154,893 100.0%Sales deductions 6 -2,858 -1,925Net sales 97,905 97.2% 152,968 98.8%Cost of goods sold 7 -41,631 -61,952Gross profit 56,274 55.8% 91,016 58.8%Sales and marketing expenses 8.1 -11,750 -19,465Research and development expenses 8.2 -11,010 -19,857Management and administrative expenses 8.3 -11,245 -17,582Other income 329 77Other expenses 9 -15,141 -15,289Earnings before interest and tax (EBIT) 7,457 7.4% 18,900 12.2%Amortization and restructuring costs 12 14,638 19,645Earnings before interest tax and amortization(EBITA) before restructuring 22,095 21.9% 38,545 24.9%Restructuring costs 23 614 -2,829Pension costs due to restructuring 15 0 -1,548Earnings before interest tax and amortization(EBITA) after restructuring 22,709 22.5% 34,168 22.1%Amortization 12 -15,252 -15,268Earnings before interest and tax (EBIT) 7,457 7.4% 18,900 12.2%Finance income 609 2,739Finance expenses -7,653 -12,950Finance result 10 -7,044 -7.0% -10,211 -6.6%Earnings before tax 413 0.4% 8,689 5.6%Income tax 16 665 -3,373Profit of the year 1,078 1.1% 5,316 3.4%Currency translation differences 83 -432Total comprehensive income 1,161 1.2% 4,884 3.2%Earnings per share (in CHF)Basic / Diluted earnings per share 11 0.16 0.81The notes on pages 57 to 97 are an integral part of these consolidated financial statements.52 Uster Group – Consolidated Financial Statements 2009

Consolidated Statement of Financial Positionin CHF 1,000 Notes Dec 31, 2009 Dec 31, 2008Intangible assets 12 333,789 349,032Property, plant and equipment 14 9,660 8,239Pension fund asset 15 15,624 15,794Financial assets 168 225Deferred tax assets 16 2,028 2,031Non-current assets 361,269 89.3% 375,321 91.6%Inventories 17 10,451 12,233Receivables trade 18 15,108 12,235Other receivables 19 1,840 1,734Income tax receivables 1,018 792Cash and cash equivalents 20 15,053 7,490Current assets 43,470 10.7% 34,484 8.4%Assets 404,739 100.0% 409,805 100.0%Share capital 79,524 61,664Share premium 103,691 78,647Other reserves 447 123Currency translation differences -1,317 -1,400Retained earnings 21,262 20,508Shareholders’ equity 21 203,607 50.3% 159,542 38.9%Bank loans 22 114,277 154,036Provisions 23 1,282 2,735Deferred tax liabilities 16 50,133 58,403Non-current liabilities 165,692 40.9% 215,174 52.5%Bank loans 22 10,000 10,000Derivative financial instruments 4 1,900 2,111Trade and other liabilities 24 4,434 7,277Accrued liabilities 25 11,212 10,940Provisions 23 1,182 3,916Income tax liabilities and provisions 6,712 845Current liabilites 35,440 8.8% 35,089 8.6%Liabilities 201,132 49.7% 250,263 61.1%Shareholders, equity and liabilities 404,739 100.0% 409,805 100.0%The notes on pages 57 to 97 are an integral part of these consolidated financial statements.Uster Group – Consolidated Financial Statements 2009 53

Consolidated Statement of Cash Flowsin CHF 1,000 Notes Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Earnings before tax 413 8,689Adjustments forDepreciation property, plant and equipment 14 1,741 1,880Amortization intangible assets 12 15,252 15,268Change in pension fund asset 15 170 1,187Provisions -4,186 2,408Finance result 10 7,044 10,211Gain on sale of intangible assets and property,plant and equipment -105 -1420,329 39,629Change inInventories 1,721 3,286Receivables trade -2,913 3,698Other receivables -600 1,361Trade and other liabilities -2,628 -5,223Accrued liabilities 780 -5,378Change in working capital -3,640 -2,256Income taxes paid -2,411 -4,617Cash flow from operating activities 14,278 32,756Purchase of intangible assets 12 -9 -174Purchase of property, plant and equipment 14 -3,319 -3,513Purchase of financial assets -45 -48Disposal of property, plant and equipment 199 117Disposal of financial assets 99 7Interest received 75 264Cash flow from investing activities -3,000 -3,347The notes on pages 57 to 97 are an integral part of these consolidated financial statements.54 Uster Group – Consolidated Financial Statements 2009

Consolidated Statement of Cash Flows (continued)in CHF 1,000 Notes Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Proceeds from bank loans 22 5,000 0Repayment of bank loans 22 -45,000 -15,000Proceeds from issue of share capital 21 43,871 0Costs related to issue of share capital 21 -1,240 0Nominal value reduction 21 0 -3,936Interest paid -6,646 -8,477Cash flow from financing activities -4,015 -27,413Net change in cash and cash equivalents 7,263 1,996Cash and cash equivalents at beginning of period 7,490 5,383Exchange differences on cash and cash equivalents 300 111Cash and cash equivalents at end of period 20 15,053 7,490Operating cash flow generated in % of EBITA 62.9% 95.9%Free cash flow (operating cash flow plusinvesting cash flow) generated in % of EBITA 49.7% 86.1%The notes on pages 57 to 97 are an integral part of these consolidated financial statements.Uster Group – Consolidated Financial Statements 2009 55

Consolidated Statement of Changes in Equityin CHF 1,000ShareCapitalSharePremiumOther ReservesCurrencyTranslationDifferencesRetainedEarnings2008Balance at January 1, 2008 65,600 78,647 4 -968 15,311 158,594Total comprehensive income 0 0 0 -432 5,316 4,884Dividend 1) -3,936 0 0 0 0 -3,936Allocation to statutory reserves 0 0 119 0 -119 0Balance at December 31, 2008 61,664 78,647 123 -1,400 20,508 159,542in CHF 1,000ShareCapitalSharePremiumOther ReservesCurrencyTranslationDifferencesRetainedEarnings2009Balance at January 1, 2009 61,664 78,647 123 -1,400 20,508 159,542Issue of share capital 17,860 26,011 0 0 0 43,871Cost related to issue of share capital 0 -1,240 0 0 0 -1,240Tax effect of cost related to the issue ofshare capital 0 273 0 0 0 273Total comprehensive income 0 0 0 83 1,078 1,161Allocation to statutory reserves 0 0 324 0 -324 0Balance at December 31, 2009 79,524 103,691 447 -1,317 21,262 203,6071)The dividend has been paid by way of nominal value reduction.For details to the shareholders’ equity refer to note 21 Share Capital and Reserves.The notes on pages 57 to 97 are an integral part of these consolidated financial statements.56 Uster Group – Consolidated Financial Statements 2009

Uster Group – Notes to the Consolidated FinancialStatements1 Corporate InformationUster Technologies Ltd (“the Company”) and its subsidiaries (together “the Group”) are the world’s marketleader in textile quality controlling and provide systems and services that enable the industry to manufactureoptimum quality and competitive products “from fiber to fabric”. The Group has a long history as the leaderin textile electronics. For more than 60 years the testing and monitoring solutions have enabled the productionof the finest fibers, yarns and fabrics.Uster Technologies Ltd is domiciled in Switzerland. The address of its registered office is Sonnenbergstrasse10, CH-8610 Uster, Switzerland.2 Basis of Preparation of the Consolidated Financial Statements2.1 Statement of ComplianceThe consolidated financial statements of the Uster Group have been prepared in accordance with the InternationalFinancial Reporting Standards (IFRS).The consolidated financial statements of the Uster Group for the year ended December 31, 2009, were authorizedfor issue in accordance with a resolution of the Board of Directors on February 16, 2010. The generalmeeting of shareholders will be held on March 30, 2010. According to the Swiss Code of Obligation, thegeneral meeting of shareholders has the authority to approve the financial statements.2.2 Basis of MeasurementThe consolidated financial statements have been prepared on a historical cost basis except for the derivativefinancial instruments mentioned in note 4.3 Market Risk that has been measured at fair value.2.3 Functional and Presentation CurrencyThe consolidated financial statements are stated in Swiss Francs, which is the Company’s functional currency.All values are rounded to the nearest thousand (CHF 1,000) except when otherwise indicated.2.4 Significant Accounting Judgments and EstimatesIn the process of preparing the consolidated financial statements the Executive Committee of the Uster Grouphas to make judgments, assumptions and estimations that affect the reported amounts of assets, liabilities,income and expenses. These estimates are reviewed on a regular basis and are based on past experience aswell as assumptions about the future that currently seem to be reasonable. The actual results, however, coulddiffer from these estimates.The key estimates and assumptions that have a significant risk of causing material adjustments to the carryingamounts of assets and liabilities are mentioned below.Uster Group – Notes to the Consolidated Financial Statements 2009 57

2.5 Impairment of Goodwill and Intangible AssetsThe Uster Group determines at least on an annual basis whether goodwill and intangible assets with indefiniteuseful lives are to be impaired or not. For intangible assets with definite useful lives the useful life isreviewed each year and assessed for impairment whenever there is an indicator that the intangible asset maybe impaired. This requires an estimation of the value in use of the cash-generating units to which the goodwilland the intangible assets are allocated. Estimating the value in use requires to make an estimate of thefuture cash flows of the cash-generating units and to choose a suitable discount rate for the calculation ofthe present value of those cash flows (see note 13 Impairment Testing of Goodwill and Intangible Assets withIndefinite Useful Lives). These estimations are based on internal and external sources of information.2.6 Pension BenefitsThe cost of defined benefit pension plans is determined using actuarial valuations. The actuarial valuationinvolves making assumptions about discount rates, expected rates of return on assets, future salary increases,mortality rates and future pension increases. Due to the long-term nature of these plans, such estimatesare subject to significant uncertainty (see note 15 Pension Benefits).3 Summary of Significant Accounting Policies3.1 Changes in Accounting PoliciesThe accounting policies adopted in the preparation of these consolidated financial statements are consistentwith those followed in the preparation of the Group’s annual financial statements for the year ended December31, 2008, except that the Uster Group has adopted the following new and amended IFRS and IFRIC interpretationsduring the year. The principal effects of these changes in policies are discussed below.Standards, Amendments and Interpretations Effective in 2009 and Relevant for the GroupStandard /InterpretationTitleEffective DateIAS 1 Presentation of Financial Statements – Revised January 1, 2009IFRS 7 Improving Disclosures about Financial Instruments January 1, 2009IFRS 8 Operating Segments January 1, 2009IAS 1: Presentation of Financial Statements – RevisedThis amendment requires information in financial statements to be aggregated on the basis of shared characteristicsand to introduce a statement of comprehensive income. This will enable readers to analyze changesin a company’s equity resulting from transactions with owners in their capacity as owners (such as dividendsand share repurchases) separately from “non-owner” changes (such as transactions with third parties). IAS 1 Rrequires entities to present a comparative statement of financial position as at the beginning of the earliestcomparative period when the entity has applied an accounting policy retrospectively, makes a retrospectiverestatement, or reclassifies items in the financial statements.The Group has elected to present a single statement of comprehensive income.The Group has not presented three statements of financial position in these financial statements because ithas not applied an accounting policy retrospectively, made a retrospective restatement of items in its financialstatements, or reclassified items in its financial statements that affected the statement of financial positionat the beginning of the earliest comparative period.58 Uster Group – Notes to the Consolidated Financial Statements 2009

IFRS 7: Financial Instruments: Disclosures – AmendedThe amended standard requires additional disclosures about fair value measurement and liquidity risk. Fairvalue measurements related to items recorded at fair value are to be disclosed by source of inputs using athree level fair value hierarchy by class for all financial instruments recognised at fair value. In additionreconciliation between the beginning and ending balance for level 3 fair value measurements is now requiredas well as significant transfers between levels in the fair value hierarchy.IFRS 8: Operating SegmentsThis standard was published in November 2006 and replaces IAS 14 Segment Reporting. IFRS 8 requires entitiesto define operating segments and segment performance in the financial statements based on informationused by the chief operating decision-maker. This new standard has no impact on the segments currentlyreported. It led to changes in the disclosures due to the different disclosure requirements of IFRS 8.Standards, Amendments and Interpretations Effective in 2009 not Relevant for the GroupStandard /InterpretationTitleEffective DateIFRS 1 First-time Adoption of International Financial Reporting Standards –January 1, 2009Cost of an Investment in a Subsidiary, Jointly Controlled Entity orAssociate – AmendmentsIFRS 2 Share-based Payment – Vesting Conditions and Cancellations –January 1, 2009AmendmentIAS 23 Borrowing Costs – Revised January 1, 2009IAS 27 Consolidated and Separate Financial Statements – Cost of an Investmentin a Subsidiary, Jointly Controlled Entity or Associate –AmendmentsJanuary 1, 2009IAS 32 andIAS 1Financial Instruments – Amended and Presentation of FinancialStatements – AmendmentJanuary 1, 2009IFRIC 13 Customer Loyalty Programmes July 1, 2008IFRIC 15 Agreements for the Construction of Real Estate January 1, 2009IFRIC 16 Hedges of a Net Investment in a Foreign Operation October 1, 2008Improvements to IFRS January 1, 2009Uster Group – Notes to the Consolidated Financial Statements 2009 59

Standards, Amendments and Interpretations that are not yet Effective in 2009and have not been Early Adopted by the GroupIFRS1 Additional Exemptions for first time adopters – Amendment January 1, 2010IFRS2 Group Cash-settled Share-based PaymentJanuary 1, 2010Transactions – AmendmentIFRS 3 Business Combinations – Revised July 1, 2009IFRS9 Financial Instruments January, 2013IAS 24 Related Party Disclosures January 1, 2011IAS 27 Consolidated and Separate FinancialJuly 1, 2009Statements – AmendmentIAS 32 Classification of Rights Issues February 1, 2010IAS 39 Embedded Derivatives – AmendmentJuly 1, 2009Eligible hedged items – AmendmentIFRIC 9 Embedded Derivatives – Amendment July 1, 2009IFRIC 14 Prepayments of a Minimum Funding Requirement – Amendment January 1, 2011IFRIC 17 Distributions of Non-cash Assets to Owners July 1, 2009IFRIC 18 Transfer of Assets from Customers transfer of assets receivedafter July 1, 2009IFRIC 19 Extinguishing Liabilities with Equity Instruments July 1, 2010Improvements to IFRS January 1, 2009The Group has not undergone a detailed analysis on the relevance for the Group of the above mentionedstandards, amendments and interpretation. Therefore a final assessment can presently not be made.Improvements to IFRSIn April 2009 the board issued its second omnibus of amendments to its standards primarily with the goalto remove inconsistencies and clarifying wording. None of these improvements will have an impact on theGroup.3.2 Basis of ConsolidationThe consolidated financial statements comprise the financial statements of Uster Technologies Ltd and allits subsidiaries for the period ended December 31, 2009 and 2008, respectively. The financial statements ofthe subsidiaries are prepared for the same reporting period as the parent company, using consistent accountingpolicies.Subsidiaries are entities over which the Group has control, i. e. has the power to govern the financial andoperating policies so as to obtain benefits from their activities. The financial statements of subsidiaries areincluded in the consolidated financial statements from the date that control commences until the date thatcontrol ceases.All intragroup balances, transactions as well as any income and expenses arising from intragroup transactionsare eliminated upon consolidation. Profits and losses arising from intragroup transactions areeliminated in full.60 Uster Group – Notes to the Consolidated Financial Statements 2009

3.3 Foreign CurrencyForeign Currency TransactionsEach subsidiary determines its functional currency, and items included in the financial statements of eachsubsidiary are measured using that functional currency. Transactions in foreign currencies are initiallyrecorded in the functional currency at the rate ruling at the date of the transaction.Monetary assets and liabilities denominated in foreign currency at the reporting date are translated intothe functional currency using the rates valid at that date.Exchange rate gains and losses arising from transactions and from the translation of Statement of FinancialPosition items denominated in foreign currencies are recognized in the Statement of ComprehensiveIncome.Foreign SubsidiariesAs at the reporting date the financial statements of all subsidiaries that have a functional currency differentfrom the presentation currency are translated into the presentation currency as follows:• Assets and liabilities are translated at the closing rate ruling at the reporting date.• Income and expenses are translated at exchange rates at the dates of transactions.The exchange differences resulting from the above translation are recognized directly in other comprehensiveincome. Upon the disposal of a foreign subsidiary the deferred cumulative exchange differences stated inother comprehensive income are recognized in the Statement of Comprehensive Income. None of the subsidiarieshas the currency of a hyperinflationary economy.Foreign exchange gains and losses resulting from intragroup loans of which the settlement is neither plannednor likely in the foreseeable future are considered to be part of a net investment in a subsidiary and are recognizeddirectly in other comprehensive income. The deferred cumulative exchange differences stated inother comprehensive income are recognized in the Statement of Comprehensive Income on disposal of theforeign subsidiary or upon repayment of the intragroup loans.The following rates were used for the translation of the financial statements of the foreign subsidiaries:Closing RatesDec 31, 2009 Dec 31, 2008 Jan 1 –Dec 31, 2009Average RatesJan 1 –Dec 31, 2008CHF CHF CHF CHFUSD 1 1.030 1.057 1.087 1.083EUR 1 1.484 1.488 1.510 1.587JPY 100 1.114 1.169 1.161 1.051CNY 100 15.166 15.473 15.906 15.594THB 100 3.092 3.044 3.163 3.288INR 100 2.213 2.199 2.245 2.504BRL 100 59.077 45.370 54.727 59.838MXN 100 7.841 7.680 8.047 9.767TRY 100 68.854 69.480 69.859 83.885Uster Group – Notes to the Consolidated Financial Statements 2009 61

3.4 Intangible AssetsBusiness Combinations and GoodwillBusiness combinations are accounted for using the purchase method. This involves recognizing identifiableassets (including previously unrecognized intangible assets) and liabilities (including contingent liabilitiesand excluding future restructuring) of the acquired business at fair value.Goodwill represents the excess of the cost of the business combination over the Group’s interest in the netfair value of the identifiable assets, liabilities and contingent liabilities at the date of the acquisition. Whenthe excess is negative (negative goodwill), it is recognized immediately in profit or loss. Goodwill acquiredin a business combination is initially measured at cost.Following initial recognition goodwill is measured at cost less any accumulated impairment losses. For thepurpose of impairment testing goodwill is allocated from the date of acquisition to cash-generating units.The allocation is made to those cash-generating units or groups of cash-generating units that are expectedto benefit from the business combination, irrespective of whether other assets or liabilities of the Group areassigned to those units. Each unit to which the goodwill is allocated represents the lowest level within theUster Group at which the goodwill is monitored for internal management purposes. Impairment losses ongoodwill are not reversed.Research and DevelopmentResearch costs are expensed as incurred. An intangible asset arising from development expenditure on anindividual project is recognized only when the Group can demonstrate the technical feasibility of completingthe intangible asset so that it will be available for use or sale, its intention to complete and its ability touse or sell the asset, how the asset will generate future economic benefits, the availability of resources tocomplete the asset and the ability to measure reliably the expenditure during the development. Currentlythe Group did not capitalize development cost.Other Intangible AssetsIntangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assetsacquired in a business combination is the fair value at the date of acquisition. Following initial recognitionintangible assets are carried at cost less any accumulated amortization and any accumulated impairmentlosses.The useful lives of intangible assets are assessed to be either finite or indefinite.Intangible assets with finite lives are amortized using the straight-line method over their useful economiclife and assessed for impairment whenever there is an indication that the intangible asset may be impaired.The amortization period and the amortization method for an intangible asset with a finite useful life arereviewed at least once, usually at the end of, each financial year. Changes in the expected useful life or theexpected pattern of consumption of future economic benefits embodied in the asset are accounted for bychanging the amortization period or method and treated as changes in accounting estimates. The amortizationexpense on intangible assets with finite lives is recognized in the Statement of Comprehensive Income.Intangible assets with an indefinite useful life are tested annually for impairment either individually or atthe level of the cash-generating unit. Such intangibles are not amortized. The useful life of an intangibleasset with an indefinite life is reviewed annually to determine whether indefinite life assessment continuesto be supportable. If not, the change in the useful life assessment from indefinite to definite is made on aprospective basis.62 Uster Group – Notes to the Consolidated Financial Statements 2009

The useful lives of the intangible assets are as follows:Useful Life in YearsSoftware 5Customer base 20Technology 10USTER ® STATISTICS 25Trademarkindefinite3.5 Property, Plant and EquipmentProperty, plant and equipment including land and buildings are stated at cost less accumulated depreciationand accumulated impairment. Such cost includes expenditure directly attributable to the acquisition of theproperty, plant and equipment.The cost of replacing part of property, plant and equipment is included in the carrying amount of the itemif it is probable that the future economic benefits associated with the item will flow to the Group and the costcan be measured reliably. The cost for all other repairs and maintenance is charged to the Statement of ComprehensiveIncome as incurred.Depreciation is calculated using the straight-line method over the estimated useful lives of the assets. Landis not depreciated.The useful lives of property, plant and equipment are as follows:Useful Life in YearsBuildings 25Plant and machinery 3–5Office equipment 3–5IT and communication equipment 2–6Vehicles 4–5The residual values and useful lives of property, plant and equipment are reviewed and adjusted, if appropriate,at the end of each financial year.The carrying values of property, plant and equipment are reviewed for impairment when events or changesin circumstances indicate that the carrying value may not be recoverable.Items of property, plant and equipment are derecognized upon disposal or when no future economicbenefits are expected from their use or disposal. Any gains or losses on disposals are recognized within“Other income” or “Other expenses” in the Statement of Comprehensive Income.Uster Group – Notes to the Consolidated Financial Statements 2009 63

3.6 Financial InstrumentsFinancial InstrumentsFinancial instruments comprise investments in equity and debt securities, trade and other receivables, cashand cash equivalents, loans and borrowings, trade and other payables as well as accrued liabilities.Financial instruments are classified in the following categories:• Financial assets at fair value through profit or loss• Loans and receivables• Held-to-maturity investments• Available-for-sale financial assets• Financial liabilities at fair value through profit or loss• Financial liabilities at amortized costThe classification depends on the purpose for which the financial assets or liabilities were acquired or enteredinto and is determined at initial recognition.Non-derivative financial instruments are recognized initially at fair value plus, for instruments not at fairvalue through profit and loss, any directly attributable transaction costs. Subsequent to initial recognitionthey are measured as described below.Financial Assets at Fair Value through Profit or LossFinancial assets at fair value through profit or loss include financial assets held for trading. A financial assetfalls under this category if acquired principally for the purpose of selling in the short-term. Assets in thiscategory are classified as current assets. The Group did not have financial instruments falling under thiscategory on December 31, 2009 or 2008.Subsequent to initial recognition financial assets at fair value through profit or loss are measured at fairvalue, and changes therein are recognized in profit or loss without any deduction for transaction coststhat may occur on sale or disposal.Loans and ReceivablesLoans and receivables are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for maturities greater than 12 monthsafter the reporting date. These are classified as non-current assets. The Group’s loans and receivablescomprise “receivables trade” (note 18 Receivables Trade), “other receivables” (note 19 Other Receivables),“cash and cash equivalents” (note 20 Cash and Cash Equivalents) as well as “financial assets” that includemainly deposits.Loans and receivables are carried at amortized cost, using the effective interest method less any allowancefor impairment. Gains and losses are recognized in profit and loss when the loans and receivables arederecognized or impaired.64 Uster Group – Notes to the Consolidated Financial Statements 2009

Held-to-maturity InvestmentsHeld-to-maturity investments are non-derivative financial instruments which carry fixed or determinablepayments and fixed maturities and which the Group has the positive intention and ability to hold tomaturity. The Group did not have financial instruments falling under this category on December 31, 2009or 2008.Available-for-sale Financial AssetsAvailable-for-sale financial assets are those non-derivative financial instruments that are designated asavailable-for-sale or are not classified in any of the three preceding categories. As of December 31, 2009 and2008, no financial assets have been designated as available-for-sale financial assets.Financial Liabilities at Fair Value through Profit or LossFinancial liabilities at fair value through profit or loss include financial liabilities held for trading. Afinancial liability falls under this category if entered into principally for the purpose of repayment in theshort-term. Liabilities in this category are classified as current liabilities.Subsequent to initial recognition financial liabilities at fair value through profit or loss are measured at fairvalue, and changes therein are recognized in profit or loss.As of December 31, 2009, the Group held one derivative financial instrument (see note 4.3 Market Risk) tohedge its interest rate risk exposure on the bank loans. This interest rate swap, however, does not qualify asa hedge accounting instrument according to IAS 39.It is recognized initially at fair value (as an asset or liability at fair value through profit or loss) and any gainsor losses resulting from the valuation at market value are taken through profit or loss as incurred.Financial Liabilities at Amortized CostAll loans and borrowings are initially recognized at fair value less directly attributable transaction costs.Subsequently they are measured at amortized cost, using the effective interest method. Gains and losses arerecognized in the Statement of Comprehensive Income when the liabilities are derecognized as well as throughthe amortization process.As of December 31, 2009 and 2008, the Group had bank loans as well as trade and other liabilities that qualifiedas financial liabilities at amortized cost (see notes 22 Bank Loans and, 24 Trade and Other Liabilities).Accounting for finance income and expenses is discussed in note 3.14 Finance Income and Expenses.Share CapitalOrdinary SharesOrdinary shares are classified as equity. Transaction costs directly attributable to the issue of ordinary sharesare recognized as a deduction from equity net of any tax effects.Treasury SharesWhen share capital recognized as equity is repurchased, the amount of the consideration paid is recognizedas a deduction from equity. When treasury shares are sold or reissued subsequently, the amount received isrecognized as an increase in equity and the resulting surplus or deficit on the transaction is recorded inretained earnings. As of December 31, 2009 and 2008, the Group did not have any treasury shares.Uster Group – Notes to the Consolidated Financial Statements 2009 65

3.7 InventoriesInventories are measured at the lower of cost and net realizable value. Cost for inventories is based on theweighted average principle and includes expenditure incurred in acquiring the inventories, conversion costsand other costs incurred in bringing them to their existing location and condition. Manufactured inventoriesas well as work in progress cost includes an appropriate share of production overheads based on normaloperating capacity.Net realizable value is the estimated selling price in the ordinary course of business less the estimated costsof completion and the selling expenses.3.8 Cash and Cash EquivalentsCash and cash equivalents include cash on hand, bank account balances as well as short-term deposits withan original maturity of 90 days or less.For the purpose of the Consolidated Statements of Cash Flows bank overdrafts that are repayable on demandand form an integral part of the Group’s cash management are included as a component of cash and cashequivalents. As of December 31, 2009 and 2008, the Group did not have any such overdrafts drawn.3.9 ProvisionsProvisions are recognized when the following criteria are met:• The Group has a present legal or constructive obligation as a result of a past event;• It is probable that an outflow of resources embodying economic benefits will be required to settle theobligation;• The amount of the obligation can be reliably estimated.The expense relating to any provision is presented in the Statement of Comprehensive Income net of anyreimbursement.3.10 ImpairmentIntangible Assets and Property, Plant and EquipmentAssets with an indefinite useful life are not subject to amortization and depreciation but are tested forimpairment annually or more frequently if events or changes in circumstances indicate that the carryingvalue may be impaired.Assets that are subject to amortization and depreciation are reviewed for impairment whenever there is anindication that the carrying amount may not be recoverable.An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverableamount. An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value inuse. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there areseparately identifiable cash in flows (cash-generating units).Impairment losses are recognized in the Statement of Comprehensive Income. Intangible assets other thangoodwill and intangible assets with indefinite useful lives and property, plant and equipment for which animpairment loss was recognized are reviewed for possible reversal of the impairment at each reporting date.Such reversal is recognized in the Statement of Comprehensive Income.66 Uster Group – Notes to the Consolidated Financial Statements 2009

Financial AssetsA financial asset is assessed at each reporting date to determine whether there is any objective evidence thatit is impaired. An impairment loss in respect of a financial assets measured at amortized cost is calculatedas the difference between its carrying amount and its present value of the future estimated cash flows discountedat the original effective interest rate. An impairment loss in respect of an available for sale financialasset is calculated by reference to its fair value. Individually significant financial assets are tested for impairmenton an individual basis. In relation to trade receivables a provision for impairment is made when thereis objective evidence (such as the probability of insolvency or significant financial difficulties of the debtor)that the Group will not be able to collect all of the amounts due under the original terms of the invoice. Thecarrying amount of the receivable is reduced through use of an allowance account. Impaired debts are derecognizedwhen they are assessed as uncollectible.3.11 Pension BenefitsDefined Benefit Pension PlanUster Technologies Ltd provides pension benefits for its employees in Switzerland in the event of retirement,disability, and death. The pension scheme is organized as a separate legal entity and is funded in accordancewith legal requirements.Costs and liabilities related to the defined benefit pension plan are determined using the projected unitcredit method with attribution of benefit by service pro rata.The amount recognized in the Statement of Financial Position in respect of defined benefit pension plansis the fair value of plan assets less the present value of the defined benefit obligation at reporting date,together with adjustments for unrecognized actuarial gains and losses, unrecognized past service costand for unrecognized assets.Actuarial gains and losses are recognized as income or expense when the cumulative unrecognized actuarialgain or loss exceeds 10.0% of the higher of the defined benefit obligation and the fair value of the planassets. These gains or losses are recognized over the expected average remaining working life of the employeesparticipating in the plan.Defined Contribution PlansFor employees in other subsidiaries the company pays contributions to the separate legal entity as the plans’rules require. The regular contributions constitute net periodic costs for the year in which they are due andas such are included in personnel expenses.3.12 LeasesLeases in terms of which the Group assumes substantially all the risks and rewards of ownership are classifiedas finance leases. As of December 31, 2009 and 2008, the Group did not have any finance leases.All the Group’s leases are operating leases and the leased assets are not recognized in the Group’s Statement ofFinancial Position. Operating lease payments are recognized as an expense in the Statement of ComprehensiveIncome on a straight-line basis over the lease term. Lease incentives received are recognized as an integral partof the total lease expense over the term of the lease.Uster Group – Notes to the Consolidated Financial Statements 2009 67

3.13 Revenue RecognitionRevenue from the sale of testing instrumentation is measured at the fair value of the consideration received orreceivable net of returns, discounts and volume rebates, sales taxes and duty. Revenue is recognized whenthe significant risks and rewards of ownership of the goods have passed to the buyer; it is probable thatthe economic benefits associated with the transaction will flow to the entity, the associated costs incurredor to be incurred can be estimated reliably, and the amount of revenue can be measured reliably.The transfer of risks and rewards for products and spare parts sold usually occurs when they are received bythe client at the port of entry. However, sometimes the risks and rewards are already transferred to the clientas soon as the products and spare parts leave an entity of the Uster Group.Revenue from service contracts relating to maintenance of testing instrumentation sold is recognized on a prorata basis over the contract period. The length of the service contracts usually varies between 3 and 12 months.3.14 Finance Income and ExpensesFinance income includes interest income on funds invested as well as changes in the fair value of the interestrate swap described in note 4.3 Market Risk. Interest income is recognized as it accrues in profit or loss usingthe effective interest rate method.Finance expenses comprise interest expense on loans, changes in the fair value of the interest rate swapdescribed in note 4.3 Market Risk, and impairment losses recognized on non derivative financial instrumentswith the exception of accounts receivable trade for which the valuation allowance is recorded under salesdeductions. All interest expenses on loans are recognized in profit or loss using the effective interest ratemethod.3.15 Income TaxIncome tax includes current and deferred tax. Income tax is recognized over the Statement of ComprehensiveIncome except to the extent that it relates to items recognized directly in equity or in other comprehensiveincome, in which case it is recognized in equity or other comprehensive income.Current Income TaxCurrent income tax assets and liabilities for the current and prior periods are measured at the amount expectedto be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute theamount are those that are enacted or substantively enacted at the reporting date.Deferred TaxDeferred income tax is provided using the liability method on temporary differences at the reporting datebetween the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.Deferred income tax recognized for all taxable temporary differences except:• If the deferred income tax arises from the initial recognition of an asset or liability in a transaction that isnot a business combination and, at the time of the transaction, affects neither the accounting profit northe taxable profit or loss;• With respect to the taxable temporary differences associated with investments in subsidiaries where thetiming of the reversal of the temporary differences can be controlled and it is probable that the temporarydifferences will not reverse in the foreseeable future;• On taxable temporary differences arising on the initial recognition of goodwill.68 Uster Group – Notes to the Consolidated Financial Statements 2009

Deferred income tax assets are recognized for all carry forwards of unused tax credits and unused tax lossesto the extent that it is probable that taxable profit will be available against which the deductible temporarydifferences and the carry forwards of unused tax credits and losses can be utilized.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the yearwhen the asset is realized or the liability is settled, based on tax rates and tax laws that have been enacted orsubstantively enacted at the reporting date.Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right existsto set off current tax assets against current income tax liabilities and the deferred income taxes relate to thesame taxable entity and the same taxation authority.A provision is made for non-recoverable withholding taxes on undistributed earnings of foreign subsidiaries.4 Financial Risk ManagementThe Uster Group is exposed to the following risks from its use of financial instruments:• Credit risk• Liquidity risk• Market riskIncluded in this note is information regarding the Group’s exposure to each of these risks, the Group’s objectives,policies and processes for measuring and managing risks as well as information about the managementof capital.The Board of Directors has set up the Group’s financial risk management framework. The Executive Committeeagrees policies for managing each of the risks and monitors them on a regular basis. The Audit Committeeis responsible to judge the risk assessment established by the Executive Committee and the proposedmeasures to reduce risks. It evaluates at regular intervals the financial risk management and monitoringprocedures of the Executive Committee.4.1 Credit RiskCredit risk means the risk to suffer a financial loss if a customer or counterparty to a financial instrumentdoes not meet the contractual obligations. It arises principally from the Group’s accounts receivable trade.Generally it is the policy of the Group to work in emerging countries with secured payment terms such ase. g. letters of credit and prepayments in hard currencies like CHF, EUR, USD or in cases where this is notpossible to insure the revenue at SERV (Swiss Export Risk Insurance) or similar trade financing concepts.This policy is applied with new customers as well as with existing customers. If customers wish to trade oncredit terms, it is the Group’s policy that these customers are subject to credit verification procedures. Inaddition receivable balances are monitored on an ongoing basis with the result that the Group’s exposure tolosses is not considered significant.With respect to credit risks arising from other financial assets, the Group’s exposure to credit risks has amaximum exposure equal to the carrying amount of these financial assets. Since Uster maintains bankingrelations with first-class financial institutions, the risk is considered minimal.Uster Group – Notes to the Consolidated Financial Statements 2009 69

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposureto credit risk at the reporting date was as follows:in CHF 1,000 Dec 31, 2009 Dec 31, 2008Financial assets 168 225Receivables trade 15,108 12,235Other receivables 408 332Cash and cash equivalents 15,053 7,490Total 30,737 20,2824.2 Liquidity RiskLiquidity risk is the risk that the Group will not be able to meet its financial obligations as they become due.The Group manages its liquidity in a way that it will always have sufficient liquidity to meet its obligations,even under stressed conditions.For medium term the Group uses a recurring cash planning tool to monitor its risk to a shortage of funds.This tool considers the expected cash inflows and outflows in the Group for the coming six months ona detailed level. The long-term monitoring is done based on the 5-year cash flow forecast also used forimpairment testing (see note 13). For temporary cash shortages, the Group currently has two revolvingcredit facilities of CHF 5.0 million each and a non-drawn amount of CHF 10 million of loan facility B atits disposal (2008: CHF 15.0 million in total).The following table shows the contractual maturities of the financial liabilities:Dec 31, 2008in CHF 1,000Within1 year1 to2 years3 to5 yearsOver5 yearsTotalBank loans 15,112 14,802 153,675 0 183,590Interest rate swap 704 704 703 0 2,111Trade and other liabilities 7,277 0 0 0 7,277Accrued liabilities 4,336 0 0 0 4,336Total liabilities 27,429 15,506 154,378 0 197,314Dec 31, 2009in CHF 1,000Within1 year1 to2 years3 to5 yearsOver5 yearsTotalBank loans 13,550 13,266 107,982 0 134,798Interest rate swap 990 910 0 0 1,900Trade and other liabilities 4,434 0 0 0 4,434Accrued liabilities 5,331 0 0 0 5,331Total liabilities 24,305 14,176 107,982 0 146,46370 Uster Group – Notes to the Consolidated Financial Statements 2009

4.3 Market RiskMarket risk is the risk that changes in market prices such as foreign exchange rates, interest rates and financialenvironmental risks affect the Group’s income or the value of its holding of financial instruments.Foreign Currency RiskThe Group is exposed to currency risks on accounts receivables, accounts payables and loans that are denominatedin a currency other than the respective functional currencies of the Group entities. The currenciesin which these positions are primarily denominated as of December 31, 2009, are USD / CHF, CHF / CNY andTRY/CHF (transaction currency / functional currency) (2008: USD / CHF and CHF / CNY).The Group developed a model to actively control and limit these foreign exchange risks at the source andtherefore has no need to enter into contracts to hedge these exposures as the remaining risk is not significant.Nevertheless the following sensitivity analysis has been performed.Increases of 5% of the transaction currency against the functional currency would have the following impacton the consolidated financial statements:Dec 31, 2008in CHF 1,000Effect on Profitbefore TaxEffect inEquityCurrenciesUSD / CHF -71 64CHF / CNY -14 -14Dec 31, 2009in CHF 1,000Effect on Profitbefore TaxEffect inEquityCurrenciesUSD / CHF -21 -21CHF / CNY -55 -55TRY/CHF 20 44Interest Rate RiskAccording to the credit facility agreement for the bank loans described in note 22 Bank Loans, the Group hasto hedge at least CHF 50.0 million of the bank loans. Therefore the Group entered on October 29, 2007, intoan interest rate swap contract to fix the Libor at a floor of 2.4% and a cap of 3.65%. The interest rate swap isthe only derivative financial instrument of the Group and does not qualify for hedge accounting accordingto IAS 39. Its contract volume as of December 31, 2009, amounted to CHF 50.0 million and it expires onOctober 29, 2011.The interest situation and hedging possibilities are continuously monitored.Uster Group – Notes to the Consolidated Financial Statements 2009 71

The table below sets out the carrying amount of the Group’s interest bearing financial instruments exposedto interest rate risk:Dec 31, 2008in CHF 1,000Balance within1 year1 to2 years3 to5 yearsOver5 yearsVariable rateCash and cash equivalents 7,490 0 0 0Bank loans 164,036 154,277 144,518 0Interest rate swap 2,111 0 0 0Total 173,637 154,277 144,518 0Dec 31, 2009in CHF 1,000Balance within1 year1 to2 years3 to5 yearsOver5 yearsVariable rateCash and cash equivalents 15,053 0 0 0Bank loans 124,277 114,518 104,759 0Interest rate swap 1,900 0 0 0Total 141,230 114,518 104,759 0The Group’s bank loans at variable rate are analyzed on a dynamic basis with regards to the interest rate exposure.On a regular basis the sensitivity of the Group’s result before tax to a reasonably possible change in interestrates, with all other variables held constant, is tested.The result of the sensitivity testing mentioned above is as follows:Change in base pointsEffect on result before taxin CHF 1,000Dec 31, 2009 Dec 31, 2008+ 5 -84 -90+ 20 -335 -361- 10 168 180-15 251 2704.4 Capital ManagementThe Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a goingconcern in order to provide returns for shareholders and benefits for other stakeholders and to maintain anoptimal capital structure to reduce the cost of capital. As of December 31, 2009, equity amounted to 50.3%of total equity and liabilities (2008: 38.9%).Please refer to note 22 Bank Loans for covenant requirement.72 Uster Group – Notes to the Consolidated Financial Statements 2009

4.5 Financial Instruments – Fair ValuesThe fair value of financial assets and liabilities together with the carrying amounts shown inthe Statement of Financial Position are as follows:in CHF 1,000 Dec 31, 2008ValuationCategory acc. toIAS 39ValuationLevel acc. toIFRS 7TotalCarryingAmountNon financialAssets/LiabilitiesAmortizedCostsFinancial Assets/LiabilitiesFairValueCarryingAmountFair ValueAssetsFinancial assets L&R 225 225 225 225Receivables trade L&R 12,235 12,235 12,235 12,235Other receivables L&R 1,734 1,402 332 332 332Cash and cash equivalents FAFVTPL 1 7,490 7,490 7,490 7,490LiabilitiesBank loans non-current FLAC 154,036 154,036 154,036 155,000Bank loans current FLAC 10,000 10,000 10,000 10,000Interest rate swap FLFVTPL 2 2,111 2,111 2,111 2,111Trade and other liabilities FLAC 7,277 7,277 7,277 7,277Accrued liabilities FLAC 10,940 6,604 4,336 4,336 4,336Total -162,680 -157,478 -158,442in CHF 1,000 Dec 31, 2009ValuationCategory acc. toIAS 39ValuationLevel acc. toIFRS 7TotalCarryingAmountNon financialAssets/LiabilitiesAmortizedCostsFinancial Assets/LiabilitiesFairValueCarryingAmountFair ValueAssetsFinancial assets L&R 168 168 168 168Receivables trade L&R 15,108 15,108 15,108 15,108Other receivables L&R 1,840 1,432 408 408 408Cash and cash equivalents FAFVTPL 1 15,053 15,053 15,053 15,053LiabilitiesBank loans non-current FLAC 114,277 114,277 114,277 115,000Bank loans current FLAC 10,000 10,000 10,000 10,000Interest rate swap FLFVTPL 2 1,900 1,900 1,900 1,900Trade and other liabilities FLAC 4,434 4,434 4,434 4,434Accrued liabilities FLAC 11,212 5,881 5,331 5,331 5,331Total -109,654 -105,205 -105,928Categories:L&R:FAFVTPL:FLFVTPL:FLAC:Loans and ReceivablesFinancial Assets at Fair Value through Profit or LossFinancial Liabilities at Fair Value through Profit or LossFinancial Liabilities at Amortized CostUster Group – Notes to the Consolidated Financial Statements 2009 73

The fair value of the bank loans has been determined using market interest rates. As of December 31, 2009,the Group held an interest rate swap measured at fair value, which classifies as Level 2 fair value measurement.During the reporting period there have been no transfers between the Level 1 and Level 2 fair valuemeasurement.The fair value of unquoted instruments is estimated by discounting expected future cash flows usingmarket rates currently available for instruments on similar terms, credit risk and remaining maturities.5 Segment ReportingUnder the application of IFRS 8 (management approach) the Group is organized in only one operatingsegment. Whilst revenues are primarily reported by geographical areas, the operating results and thestatement of financial position are only analyzed at Group level. This is the primary way in whichManagement and the board of directors are provided with financial information to decide on allocationof resources. Therefore the information by operating segment has already been given in these ConsolidatedFinancial Statements.The Group’s activities are managed with focus on the three geographical regions: Asia, Europe and theAmericas. In each of these geographical regions the Group is present with a Technology Center to be closeto the market. Therefore the following information is primarily given following the management focus.Additional country level information is provided below the respective table.Gross Sales by Geographical Location of Customersin CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Asia 71,672 71.1% 102,447 66.1%Europe 15,863 15.7% 34,566 22.3%Americas 13,228 13.1% 17,880 11.5%Total 100,763 100.0% 154,893 100.0%Total Sales attributable to the country of domicile amounted to CHF 0.3 million (2008: CHF 1.0 million).In 2009 the sales to Chinese customers amounted to 39.2% of total sales (2008: 22.9%) and revenues withIndian customers reached 5.7% (2008: 11.4%) of total sales. Revenues of approximately CHF 15.6 million(2008: CHF 7.6 million) are derived from a single external customer. These revenues are included in the geographicallocation Asia. Thanks to the good relationship the risk of losing this customer could be minimized.74 Uster Group – Notes to the Consolidated Financial Statements 2009

Gross Sales by Testing Instrumentation and ServiceGross sales primarily derive from the sale of testing instrumentation which is used to increase and balancethe quality of textile production and from service sales consisting of the maintenance of these instruments.in CHF 1,000 Dec 31, 2009 Dec 31, 2008Testing instrumentation 85,232 84.6% 136,301 88.0%Service sales 15,531 15.4% 18,592 12.0%Total 100,763 100.0% 154,893 100.0%Non-current Assets 1) by Geographical Location of Legal Entityin CHF 1,000 Dec 31, 2009 Dec 31, 2008Asia 3,216 0.9% 3,506 1.0%Europe 337,482 98.3% 350,687 98.2%Americas 2,751 0.8% 3,078 0.9%Total 343,449 100.0% 357,271 100.0%1)Other than financial instruments, deferred tax assets and post-employment benefit assets.The full amount of non-current assets in Europe is attributable to the country of domicile.6 Sales DeductionsSales deductions include items that are directly related to revenue from sales such as discounts, currencydifferences, shipping expenses and the change in the allowance for uncollectible receivables (see note 18Receivables Trade).7 Cost of Goods SoldCost of goods sold comprises direct production costs such as material expense and personnel costs as well asa proportion of overhead costs like logistics procurement and quality control. The material expense for 2009amounted to CHF -24.9 million (2008: CHF -39.4 million).Additionally warranty costs and the depreciation on the production equipment are included in this expensecategory.8 Overhead8.1 Sales and Marketing ExpensesThis position contains expenses for sales and marketing activities such as wages, amortization, depreciation,project cost, agent commissions, consultancy, and other overhead costs.8.2 Research and Development ExpensesThe expenditure for research and development includes wages, amortization, depreciation, material costs,consultancy, and other overhead costs related to research and development projects.8.3 Management and Administrative ExpensesManagement and administrative expenses consist of wages, amortization, depreciation, rent, consultancy,IT, and other overhead costs of the support process.Uster Group – Notes to the Consolidated Financial Statements 2009 75

8.4 Personnel Expensein CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Wages and salaries 25,470 37,267Social security costs 3,261 4,332Pension costs 2,149 3,637Other personnel expense 767 5,602Total 31,647 50,8388.5 Amortization, Impairment and Depreciationin CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Amortization of technology, customer base, USTER ® STATISTICS 15,066 15,066Amortization of other intangible assets 186 202Depreciation of property, plant and equipment 1,741 1,880Total 16,993 17,1489 Other ExpensesOther expenses amounting to CHF 15.1 million (2008: CHF 15.3 million) consist mainly of the amortizationof technology, customer base, and USTER ® STATISTICS.10 Finance Resultin CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Interest income bank accounts & fixed-term deposits (L&R) 68 262Interest income other receivables (L&R) 61 63Gain on interest rate swap (FLFVTPL) 211 180Exchange gain 269 2,234Finance income 609 2,739Interest expense bank loans (FLAC) -5,826 -7,583Other expenses / fees bank loans (FLAC) -841 -998Loss on interest rate swap (FLFVTPL) 0 -2,073Other finance expense -220 -137Exchange loss -766 -2,159Finance expense -7,653 -12,950Finance result -7,044 -10,211Categories:L&R: Loans and ReceivablesFLFVTPL: Financial Liabilities at Fair Value through Profit or LossFLAC: Financial Liabilities at Amortized Cost76 Uster Group – Notes to the Consolidated Financial Statements 2009

The net foreign exchange differences charged to the Statement of Comprehensive Income are included inthe following lines:in CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Sales deductions -1,117 717Cost of goods sold -5 334Finance income 269 2,234Finance expense -766 -2,159Total -1,619 1,126The origin of the above mentioned foreign exchange differences are as follows:Sales deductions: accounts receivables tradeCost of goods sold: accounts payable tradeFinance income: mainly other receivables and other payablesFinance expense: mainly other receivables and other payables11 Earnings per ShareBasic earnings per share amounts are calculated by dividing the net result for the period by the weightedaverage number of shares outstanding during the year. Since there are no dilutive potential shares, thecalculation of the diluted earnings per share is the same as the calculation of the basic earnings per share.in CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Net result 1,078,000 5,316,000Weighted average number of shares outstanding(net of treasury shares) 6,867,123 6,560,000Earnings /(loss) per share 0.16 0.81Uster Group – Notes to the Consolidated Financial Statements 2009 77

12 Intangible Assetsin CHF 1,000 Customer Base Trademark Technology USTER ®STATISTICSGoodwillOtherIntangibleAssets2008At CostBalance at January 1, 2008 180,000 58,700 48,500 30,400 64,549 612 382,761Additions 0 0 0 0 0 174 174Currency translation differences 0 0 0 0 0 -6 -6Balance at December 31, 2008 180,000 58,700 48,500 30,400 64,549 780 382,929Accumulated Amortization /ImpairmentBalance at January 1, 2008 -9,000 0 -4,850 -1,216 -3,360 -206 -18,632Amortization -9,000 0 -4,850 -1,216 0 -202 -15,268Currency translation differences 0 0 0 0 0 3 3Balance at December 31, 2008 -18,000 0 -9,700 -2,432 -3,360 -405 -33,897Net book value at January 1, 2008 171,000 58,700 43,650 29,184 61,189 406 364,129Net book value at December 31, 2008 162,000 58,700 38,800 27,968 61,189 375 349,032in CHF 1,000 Customer Base Trademark Technology USTER ®STATISTICSGoodwillOtherIntangibleAssets2009At CostBalance at January 1, 2009 180,000 58,700 48,500 30,400 64,549 780 382,929Additions 0 0 0 0 0 9 9Currency translation differences 0 0 0 0 0 -1 -1Balance at December 31, 2009 180,000 58,700 48,500 30,400 64,549 788 382,937Accumulated Amortization /ImpairmentBalance at January 1, 2009 -18,000 0 -9,700 -2,432 -3,360 -405 -33,897Amortization -9,000 0 -4,850 -1,216 0 -186 -15,252Currency translation differences 0 0 0 0 0 1 1Balance at December 31, 2009 -27,000 0 -14,550 -3,648 -3,360 -590 -49,148Net book value at January 1, 2009 162,000 58,700 38,800 27,968 61,189 375 349,032Net book value at December 31, 2009 153,000 58,700 33,950 26,752 61,189 198 333,78978 Uster Group – Notes to the Consolidated Financial Statements 2009

Customer BaseThe intangible asset “customer base” represents the estimated value of the customers of the Uster Group.Uster enjoys a strong customer loyalty and appreciation in approximately 75 countries. Technical training,product performance, trusted measurement and long living products as well as after-sales services producehigh customer retention and loyalty. Its useful life of 20 years (remaining amortization period 17 years)was reviewed during the fourth quarter of 2009 and was confirmed.TrademarkUster products are used as standard references for quality control in the global textile industry. USTER ®STATISTICS are used throughout the industry as the base benchmarks for the trading of textile products atassured levels of quality across global markets. The USTER ® STATISTICS are perceived as industry standardall over the world.The USTERIZED ® concept (as seal of quality for yarns tested and cleared with USTER ® products) is increasinglyused by well-known consumer companies to assure a consistent level of quality in support of their ownbranded products.Due to the brand awareness and the excellent reputation of the brand “USTER ® ”, this intangible asset isconsidered to have an indefinite useful life.TechnologyThe intangible asset technology summarizes the estimated value of the intellectual property of the Group, i. e.patents and designs which are registered in the name of Uster Technologies Ltd, Switzerland. These intellectualproperty rights refer to all the different processes, instruments and machines which have been developedby the Group through the course of the years. A welldefined policy protects the intellectual property in themarkets relevant to the business. The Technologies useful life of 10 years (remaining amortization period 7 years)was reviewed during the fourth quarter of 2009 and was confirmed.USTER ® STATISTICSUster provides a service to the textile industry by collecting data from thousands of samples of fiber and yarnfrom its customers around the world. The Company produces a database, USTER ® STATISTICS, of performancedata against the historic population of quality metrics and makes the results freely available to the industry.USTER ® STATISTICS was established in 1957 and looks back on more than 50 years of fiber and yarn qualitymeasurement. It is perceived as industry standard all over the world. The USTER ® STATISTICS’ useful life of25 years (remaining amortization period 22 years) was reviewed during the fourth quarter of 2009 and wasconfirmed.Uster Group – Notes to the Consolidated Financial Statements 2009 79

13 Impairment Testing of Goodwill and Intangible Assets with Indefinite Useful LivesThe annual impairment test is usually performed in the fourth quarter of each year.Goodwill and intangible assets with indefinite useful lives acquired through business combinations havebeen allocated to the respective individual cash-generating units (CGUs), which correspond to the legalentities of the Uster Group.The legal entities are the smallest identifiable group of assets that generate cash inflows that are largelyindependent of the cash inflows from other groups of assets.For the impairment test of each cash-generating unit the recoverable amount has been defined based on thevalue in use.The impairment test showed that the recoverable amounts of the tested intangible assets are well above theircarrying amount.The carrying amount of the goodwill allocated to each of the cash-generating units as of December 31, 2009and 2008, was as follows:in CHF 1,000 Dec 31, 2009 Dec 31, 2008Uster Technologies Ltd 60,538 60,538Other CGU 651 651Total 61,189 61,189The carrying amount of CHF 58.7 million of the intangible asset trademark, the only intangible asset withindefinite useful life, has been allocated to the cash-generating unit Uster Technologies Ltd.13.1 Key Assumptions Used for the Value in Use CalculationsThe following describes each key assumption on which the Group has based its cash flow projections toundertake the impairment testing of goodwill and intangible assets with indefinite useful lives. Where possiblethese key assumptions have been discussed with external professionals to ensure that they are bestestimates.EBITDAThe EBITDA projections are based on current financial forecasts and budgets covering the period from 2010to 2014. The underlying sales projections take into account the last year’s economic downturn and reachpre-crisis sales levels in the period 2014. They were established using historic performance track records,internal expectations and external official statistics and forecasts. All assumptions made are consistent withpast actual outcomes. The current financial forecast and budgets are approved by the Board of Directors.Growth RateThe growth rate used for the value in use calculation of the cash-generating units for the planning period isbased on financial budgets approved by the Board of Directors. The cash flows beyond this period are extrapolatedusing the inflation of the Consumer Price Index of the corresponding country as the growth ratethe cash-generating unit is situated in. Using the inflation rate as growth rate reflects past experience and issupported by external sources.80 Uster Group – Notes to the Consolidated Financial Statements 2009

Discount RateThe discount rate used is the pre-tax weighted average cost of capital (WACC) based on the capital asset pricingmodel. It consists unchanged to prior year of the country specific ten-year govermental bond rate at thedate of the impairment test, a country specific market risk premium, a debt interest rate and a debt / equityratio of 50 / 50. Further, a 2% (2008: 2%) markup on the cost of equity has been added to take into account thesmall cap size of the Uster Group. The values assigned to this key assumption are consistent with externalsources of information.The following data was used as a basis for the impairment test made in 2009:in CHF 1,000 Growth Rate Discount Rate2009 2008 2009 2008Uster Technologies Ltd 1.5% 1.5% 8.9% 9.8%Other CGU 5.9% 5.9% 11.2% 12.7%13.2 Impairment LossAn impairment loss is recognized if the recoverable amount is below the carrying amount. For the year underreview no impairment loss on goodwill and intangible assets with indefinite useful lives has been recognized.13.3 Sensitivity AnalysisThe Group has kept last years approach and has performed a critical sensitivity analysis on the intangibles withindefinite useful life not only by varying the assumption such as discount rate, but also the long-term growthrate and the future EBITDA. The Board of Directors and the Executive Committee of the Uster Group considerthese underlying assumptions as accurate. Nevertheless a sensitivity analysis with the following not cumulativechanges on each of the key assumptions has been performed (all other factors held constant):EBITDA projections: - 30%Growth rate: - 1.5%Discount rate: + 2.0%None of these changes leads to an impairment of either Goodwill or Trademark.That means that a negative deviation of the EBITDA projections of 30% does not lead to impairment. Thesame applies to an increase of the discount rate of 2% from 8.9% to 10.9%. Moreover, combining the variancesas follows:• Low EBITDA of 22% of gross sales starting as of FY 2010 (correlates to an EBITA of only 20% of gross sales);• Lower long-term growth rate of 1.0 %;• Higher discount rate of 10 %;does not lead to impairment.Uster Group – Notes to the Consolidated Financial Statements 2009 81

14 Property, Plant and Equipmentin CHF 1,000Land andBuildingsMachinery andEquipmentFurniture andFixtures2008At CostBalance at January 1, 2008 3,161 2,835 3,058 9,054Additions 11 2,109 1,393 3,513Disposals -9 -69 -90 -168Currency translation differences -195 -58 -84 -337Balance at December 31, 2008 2,968 4,817 4,277 12,062Accumulated Depreciation / ImpairmentBalance at January 1, 2008 -161 -942 -994 -2,097Depreciation -156 -814 -910 -1,880Reclassification 2 30 33 65Currency translation differences 14 31 44 89Balance at December 31, 2008 -301 -1,695 -1,827 -3,823Net book value at January 1, 2008 3,000 1,893 2,064 6,957Net book value at December 31, 2008 2,667 3,122 2,450 8,239Fire insurance values 5,548 16,811 7,504 29,863in CHF 1,000Land andBuildingsMachinery andEquipmentFurniture andFixtures2009At CostBalance at January 1, 2009 2,968 4,817 4,277 12,062Additions 0 2,954 365 3,319Disposals 0 -192 -349 -541Currency translation differences -75 -40 -14 -129Balance at December 31, 2009 2,893 7,539 4,279 14,711Accumulated Depreciation/ImpairmentBalance at January 1, 2009 -301 -1,695 -1,827 -3,823Depreciation -155 -737 -849 -1,741Disposals 0 101 346 447Currency translation differences 15 31 20 66Balance at December 31, 2009 -441 -2,300 -2,310 -5,051Net book value at January 1, 2009 2,667 3,122 2,450 8,239Net book value at December 31, 2009 2,452 5,239 1,969 9,660Fire insurance values 5,325 17,181 8,356 30,86282 Uster Group – Notes to the Consolidated Financial Statements 2009

15 Pension Benefits15.1 Defined Benefit Pension PlanUster Technologies Ltd provides pension benefits for its employees in Switzerland in the event of retirement,disability and death. The pension scheme is organized as a separate legal entity and is funded in accordancewith legal requirements.The following tables summarize the components of net benefit expense recognized in the Statement of ComprehensiveIncome as well as the actual return on plan assets.in CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Amounts recognized in the income statementCurrent employer service cost -2,146 -2,502Interest expense -1,981 -2,484Expected return on plan assets 2,596 3,637Amortization of net actuarial gain /(loss) -15 0Curtailment, settlement loss 0 -1,548Pension costs current year -1,546 -2,897Actual return on plan assetsExpected return 2,596 3,637Actuarial gain /(loss) on plan assets -6,151 -11,185Actual return on plan assets -3,555 -7,548Uster Technologies Ltd expects to contribute CHF 1.4 million to the defined benefit pension plan in 2010.The funded status of the pension plan and the amounts recognized in the Statement of Financial Position ofUster Technologies Ltd are as follows:in CHF 1,000 Dec 31, 2009 Dec 31, 2008Funded StatusFair value of plan assets 61,718 72,245Defined benefit obligation -61,638 -63,802Surplus 80 8,443Amounts recognized in the balance sheetSurplus 80 8,443Unrecognized actuarial loss /(gain) 15,544 7,351Pension fund asset /(liability) in the balance sheet 15,624 15,794Uster Group – Notes to the Consolidated Financial Statements 2009 83

The changes in the present value of the defined benefit obligation are as follows:in CHF 1,000 Dec 31, 2009 Dec 31, 2008Reconciliation of defined benefit obligationDefined benefit obligation at January 1 63,802 70,978Current employer service cost 2,146 2,502Interest expense 1,981 2,484Employee contribution 1,175 1,461Benefit payments / net inflow -762 -8,787Plan settlement -8,762 -3,937Plan curtailment 0 -653Actuarial (gain)/ loss 2,057 -246Defined benefit obligation at December 31 61,637 63,802The changes in the fair value of the plan assets are as follows:in CHF 1,000 Dec 31, 2009 Dec 31, 2008Reconciliation of assetsAssets at January 1 72,245 89,346Expected return 2,596 3,637Employer contribution 1,377 1,710Employee contribution 1,175 1,461Benefit payments / net inflow -762 -8,787Plan settlement -8,762 -3,937Actuarial gain /(loss) on plan assets -6,151 -11,185Assets at December 31 61,718 72,245The strategic target of major categories of plan assets as a percentage of the fair value of total plan assets areas follows:Dec 31, 2009 Dec 31, 2008Asset categoriesEquity securities 28% 26%Debt securities 33% 33%Property 26% 28%Other 13% 13%The overall expected rate of return is determined based on the plan’s asset allocation strategy and currentmarket rates.84 Uster Group – Notes to the Consolidated Financial Statements 2009

The principal assumptions used in determining the defined benefit pension plan obligations are shownbelow:Jan 1 –Dec 31, 2009Jan 1–Dec 31, 2008Actuarial assumptionsDiscount rate 3.30% 3.60%Expected return on plan assets 4.00% 4.00%Salary increases 2.00% 2.00%Pension increases 0.00% 0.00%The discount rate is determined on the basis of corporate bonds with a rating of AA or AAA.The history of experience gains and losses is summarized below:in CHF 1,000 Dec 31, 2009 Dec 31, 2008 Dec 31, 2007 Dec 31, 2006History of experience gains and lossesFair value of plan assets 61,718 72,245 89,346 85,001Defined benefit obligation -61,638 -63,802 -70,978 -66,835Surplus 80 8,443 18,368 18,166Experience (gain)/ loss on plan assets 6,151 11,185 3,988 0Experience gain /(loss) on plan liabilities 1,068 -174 630 0Uster Group – Notes to the Consolidated Financial Statements 2009 85

16 Income TaxStatement of Comprehensive Incomein CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Current income taxes -3,078 -4,479Current income taxes previous years -4,276 -234Deferred income taxes 8,019 1,340Total 665 -3,373The income taxes of the Group have been impacted in 2009 by two major effects. Firstly by a privileged taxstatus that has been granted to Uster Technologies Ltd in 2009 with retrospective effect starting January 1,2008. The application of this privileged tax status requires estimation and judgment. Based on the latestanalysis done by Management this leads to a decreased tax rate lowering current and deferred taxes.Secondly by a discussion with tax authorities in the course of an ongoing tax audit on the tax deductibilityof certain expenses in previous years. Despite the fact that management is convinced that all tax declarationshave been correctly made and no violation of applicable laws exists, a provision has been recognized to expressthe unpredictability of the outcome of this discussion.A reconciliation of the tax expense based on each subsidiary’s theoretical tax rate is as follows:in CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Earnings before tax 413 8,689Tax at the theoretical domestic ratesapplicable to individual subsidiaries -368 -89.1% -2,819 -32.4%Tax effect of non-deductibleor non-taxable items -176 -42.6% 101 1.2%Impact of tax rate changes on temporary differences 5,887 1425.4% 207 2.4%Unrecognized tax losses -341 -82.6% -378 -4.4%Non-recoverable withholding tax -22 -5.3% -147 -1.7%Current income taxes previous years -4,276 -1035.5% -234 -2.8%Others -39 -9.5% -103 -1.3%Total 665 -160.8% -3,373 -39.0%The difference between the expected tax rates 2009 of 89.1% to the previous year’s tax rate of 32.4% ismainly due to the different contribution to the tax expenses and the weighting of the tax rates of thedifferent countries.86 Uster Group – Notes to the Consolidated Financial Statements 2009

The following table shows the deferred income tax related to items charged or credited directly to equity:in CHF 1,000 Dec 31, 2009 Dec 31, 2008Tax effect of costs relatedto the issue of share capital 273 0Total 273 0Recognized Deferred Tax Assets and LiabilitiesDeferred tax assets and liabilities are attributable to the following items:in CHF 1,000 Dec 31, 2009 Dec 31, 2008Deferred tax assets by types of temporary differenceNon-current assets 1,009 1,382Inventories 903 1,208Trade and other receivables 17 26Other non-current liabilities 0 108Current liabilities and accruals 1,281 250Tax on costs related to the issue ofshare capital booked to equity 273 0Tax losses 0 142Total 3,483 3,116in CHF 1,000 Dec 31, 2009 Dec 31, 2008Deferred tax liabilities by types of temporary differenceNon-current assets 49,597 57,840Inventories 451 508Trade and other receivables 867 420Other current assets 2 0Other non-current liabilities 141 212Non-recoverable withholding tax 530 508Total 51,588 59,488Net tax assets /(liabilities) -48,105 -56,372Thereof recognized in the balancesheet as deferred tax assets 2,028 2,031Thereof recognized in the balance sheetas deferred tax liabilities 50,133 58,403The tax losses expire between 2010 and 2017 and have been recognized based on the assumption that futuretaxable profits will be available against which the Group can offset these deferred tax assets.Uster Group – Notes to the Consolidated Financial Statements 2009 87

Movements in Temporary DifferencesThe movements in temporary differences were as follows:in CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Non-current assets 7,874 1,507Inventories -257 118Trade and other receivables -481 119Other current assets -2 0Provisions 0 -26Other non-current liabilities -40 163Current liabilities and accruals 1,090 -298Non-recoverable withholding tax -22 -147Tax losses -143 -96Changes booked to income statement 8,019 1,340Tax on costs attributable tothe issue of share capital booked to equity 273 0Changes booked to equity 273 0Currency differences -25 -195Other changes -25 -195Total changes of deferred taxes 8,267 1,145Unrecognized Deferred Tax AssetsBased on a conservative evaluation of tax assets in the foreign subsidiaries deferred tax assets amounting toCHF 285,000 (2008: 418,000) have not been recognized. These relate to tax losses and temporary differencesfor which the Group does not expect to have any future taxable profit to offset them against.88 Uster Group – Notes to the Consolidated Financial Statements 2009

17 Inventoriesin CHF 1,000 Dec 31, 2009 Dec 31, 2008Raw materials and supplies 4,161 1,467Semifinished and finished goods 5,680 10,171Work in progress 610 595Total 10,451 12,233The amount of write-down of inventories recognized as an expense in the Statement of ComprehensiveIncome in 2009 amounted to CHF 0.4 million (2008: CHF 1.1 million) and is included in cost of goodssold. The total amount of inventories valued at fair value less cost to sell amounts to CHF 0.o million(2008: CHF 0.0 million).18 Receivables Tradein CHF 1,000 Dec 31, 2009 Dec 31, 2008Accounts receivable trade 14,647 12,014Bills receivable trade 461 221Total 15,108 12,235Accounts receivable trade as well as bills receivable trade are non-interest-bearing and are generally on 30to 90 days’ terms.The carrying amounts of trade and bills receivables less the allowance for uncollectible items are assumedto approximate their fair values due to the short-term nature of trade receivables.The carrying amount of the Group’s trade receivables are denominated in the following currencies:in CHF 1,000 Dec 31, 2009 Dec 31, 2008CHF 11,534 7,842USD 1,391 2,254CNY 771 292JPY 942 623EUR 90 889TRY 152 100Other 228 235Total 15,108 12,235Uster Group – Notes to the Consolidated Financial Statements 2009 89

The ageing of these receivables is as follows:in CHF 1,000 Dec 31, 2009 Dec 31, 2008Not overdue 12,197 9,018Overdue 1 to 60 days 2,572 2,779Overdue 61 to 90 days 313 379Overdue 91 to 120 days 18 58Overdue 121 to 150 days 8 1Overdue more than 150 days 0 0Total 15,108 12,235Provisions for uncollectible amounts are established based upon the difference between the receivable valueand the estimated net collectible amount. Uster establishes its provision for doubtful accounts receivabletrade based on historical loss experiences.The effective losses of accounts receivables recognized in 2009 amount to CHF 59,000 (2008: CHF 90,000).The following table summarizes the movements in the allowance for uncollectible amounts:in CHF 1,000 Dec 31, 2009 Dec 31, 2008Balance at January 1 -817 -918Amounts used 59 90Reversals 431 136Increases -553 -161Translation adjustments 2 36Balance at December 31 -878 -817The creation and release of the valuation allowance is included in sales deductions in the Statement ofComprehensive Income.19 Other Receivablesin CHF 1,000 Dec 31, 2009 Dec 31, 2008VAT receivables 719 767Other financial receivables 408 332Prepaid expenses 713 635Total 1,840 1,734They do hardly bear any risk and therefore no provision for impairment has been recognized on these balances.90 Uster Group – Notes to the Consolidated Financial Statements 2009

20 Cash and Cash Equivalentsin CHF 1,000 Dec 31, 2009 Dec 31, 2008Cash on hand 26 16Time deposits 799 3,617Bank accounts 14,228 3,857Total 15,053 7,490Cash on bank accounts earns interest at floating rates based on bank deposit rates. Time deposits are made forvarying periods of between one day and three months depending on the immediate cash requirements of theUster Group and earn interest at the respective short-term deposit rates.21 Share Capital and Reserves21.1 Share CapitalOrdinary Share CapitalOn November 2, 2009, the Uster Group issued 1.9 million newly registered shares with a nominal value ofCHF 9.40 out of the authorized capital. The ordinary share capital of Uster Technologies Ltd as of December31, 2009, amounted to CHF 79.5 million and was fully paid up. It consisted of 8,460,000 registered shareswith a nominal value of CHF 9.40 each (December 31, 2008: share capital of CHF 61.7 million and 6,560,000shares with a nominal value of CHF 9.40 each).Conditional Share Capital IncreaseAs of December 31, 2009, Uster Technologies Ltd had a conditional share capital increase available, pursuantto which the share capital may be increased by a maximum aggregate amount of CHF 3.008 million throughthe issuance of a maximum of 320,000 fully paid registered shares with a nominal value of CHF 9.40 each bythe exercise of option rights which the employees, the Management or Directors of Uster Technologies Ltdor another Group company may be granted.Development of Ordinary Sharesin 1,000 of shares 2009 2008Balance at January 1 6,560 6,560Capital increase 1,900 0Balance at December 31 8,460 6,56021.2 ReservesOther ReservesOther reserves include the statutory reserves that have to be allocated from retained earnings based on theregulations in the jurisdictions of the subsidiaries.Currency Translation DifferencesThis reserve contains all currency differences arising from the translation of the financial statements offoreign subsidiaries as well as from the translation of the intragroup loans that are considered as a part ofthe net investment in foreign subsidiaries.Uster Group – Notes to the Consolidated Financial Statements 2009 91

21.3 DividendsThe holders of registered shares are entitled to dividends and to one vote per share at the Shareholders’ meetingsof Uster Technologies Ltd. No dividends have been paid in 2009.On March 18, 2008, the general assembly decided to reduce the nominal value by CHF 0.60 per share. By this13% of the adjusted net result 2007 was paid out to the shareholders.22 Bank Loansin CHF 1,000 Dec 31, 2009 Dec 31, 2008Facility A 94,438 119,250Facility B 19,839 34,786Total non-current 114,277 154,036in CHF 1,000 Dec 31, 2009 Dec 31, 2008Current portion Facility A 10,000 10,000Total current 10,000 10,000Total 124,277 164,036Facility AIn 2007 the initial balance of Facility A amounted to CHF 140.0 million and has been reduced by the directlyattributable transaction costs that are amortized using the effective interest method. Facility A is unsecured.After yearly contractual repayments of CHF 10.0 million in December and an additional repayment ofCHF 15.0 million in November 2009, the remaining amount of CHF 85.0 million has to be repaid in full inDecember 2012.Facility BIn 2007 the initial balance of Facility B amounted to CHF 40.0 million and has been reduced by the directlyattributable transaction costs that are amortized using the effective interest method. Facility B is unsecured.It is voluntarily repayable. After a withdrawal of CHF 5.0 million in March (mainly to finance the onetimerestructuring cost paid in the first half year 2009 and for additional trade financing activities to respond tothe economic situation) repayments of CHF 20.0 million were made in November and December 2009 (June2008: voluntary repayment of CHF 5.0 million). The remaining amount of CHF 20 million has to be repaid infull in December 2012.92 Uster Group – Notes to the Consolidated Financial Statements 2009

The effective interest rate and the maturity of the bank loans are as follows:Effective Interest RateMaturityFacility A Libor + margin% Dec 31, 2012Facility B Libor + margin% Dec 31, 2012The margin applicable to the basic Libor interest rate on the bank loans ranges depending on the covenantsfrom 1% to 4.5% (2008: 0.8% to 3.5%). These covenants focus on equity ratio, on EBITDA and on free cashflows generated.The Group met all loan covenants.23 Provisionsin CHF 1,000RestructuringProvisionWarrantyProvisionsOtherProvisions2008Balance at January 1, 2008 0 3,157 1,100 4,257Amounts used 0 -1,376 0 -1,376Reversals 0 -184 0 -184Increases 2,555 1,278 135 3,968Currency translation differences -9 -5 0 -14Balance at December 31, 2008 2,546 2,870 1,235 6,651ThereofNon-current 0 1,850 885 2,735Current 2,546 1,020 350 3,916in CHF 1,000RestructuringProvisionWarrantyProvisionsOtherProvisions2009Balance at January 1, 2009 2,546 2,870 1,235 6,651Amounts used -1,581 -1,277 -635 -3,493Reversals -614 0 -471 -1,085Increases 0 392 0 392Currency translation differences 3 -3 -1 -1Balance at December 31, 2009 354 1,982 128 2,464ThereofNon-current 0 1,254 28 1,282Current 354 728 100 1,182Uster Group – Notes to the Consolidated Financial Statements 2009 93

Restructuring ProvisionsThe Company announced on November 3, 2008, world wide operational measures to adjust the cost base,proactively addressing the current market situation. Based on the original calculations total costs of theseoperational measures were expected to amount to CHF 2.8 million, of which CHF 0.3 million have been paidin 2008. The restructuring took place as planned. The remaining provision mainly covers costs for layoffswhich were already initially agreed on to be at the end of 2009 and in 2010, and legal costs to defend actionstaken against the Uster Group.Warranty ProvisionsThe Uster Group generally grants a 12-month warranty period for its products. During this period productswill be repaired or replaced free of charge. The provision is on the one hand based on gross sales and pastexperience with warranty claims. On the other hand it also considers the Group’s repairs and replacementsmade on a voluntary basis towards significant clients. It is expected that the warranty costs provided for willbe incurred within the next three years.Other ProvisionsOther provisions included a provision for tax exposures that have been resolved in 2009.Additionally other provisions include a provision with respect to an agent contract. In 2006 the Groupcancelled a contract with one of its agents and paid the open commissions due. The agent, however, refusedto sign a confirmation that all the outstanding balances are settled. Therefore the estimated possible risksfor additional claims from the agent have been provided for.24 Trade and Other Liabilitiesin CHF 1,000 Dec 31, 2009 Dec 31, 2008Accounts payable trade 1,793 3,647Advance payments from customers 1,376 1,647Other financial liabilities 1,265 1,983Total 4,434 7,277Accounts payable trade and other liabilities are non-interest-bearing and are generally on 30 to 60 days’terms. Other liabilities include mostly payables to third parties that are not related to trade activities suchas payables for marketing, consulting activities or IT costs as well as social cost payments.94 Uster Group – Notes to the Consolidated Financial Statements 2009

25 Accrued Liabilitiesin CHF 1,000 Dec 31, 2009 Dec 31, 2008Compensation related liabilities 5,881 6,604Sales related liabilities 953 763Liabilities from other operating activities 4,152 3,499Financial liabilities 226 74Total 11,212 10,940Compensation Related LiabilitiesThis accrual includes liabilities for bonus payments to the employees and the management, overtime,vacation, social costs, and a length of service compensation.Sales Related LiabilitiesSales related liabilities include accruals for sales commission or discounts to be paid to agents and clients.Liabilities from Other Operating ActivitiesComprised in this accrual are various liabilities with regards to the operating business such as liabilitiesrelated to consulting, marketing, IT as well as research and development services.Financial LiabilitiesThe accrued financial liabilities are mainly related to accrued interest due on bank loans.Uster Group – Notes to the Consolidated Financial Statements 2009 95

26 Operating Lease CommitmentsNon-cancellable operating lease rentals are payable as follows:in CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Up to 1 year 3,457 3,5632 to 5 years 6,589 9,375Total 10,046 12,938The Group usually leases its premises. The only exception is the facility of Uster Technologies, Inc. inKnoxville which is owned by the Group. CHF 8.9 million (2008: CHF 11.3 million) of the leasing expenseabove is attributable to the non-cancellable rental agreement for the facilities of Uster Technologies Ltdin Switzerland.During the year ended December 31, 2009, CHF -4.0 million was recognized in the Statement of ComprehensiveIncome as an expense with respect to operating leases (2008: CHF -3.9 million).27 Pledged AssetsAs of December 31, 2009, none of the assets of the Uster Group have been pledged (2008: none).28 Related Parties28.1 Parent and Ultimate Controlling PartySince October 19, 2007, the shares of Uster Technologies Ltd are listed on the main segment of SIX Swiss Exchange.1,017 shareholders were entered in the share register of Uster Technologies Ltd as of December 31, 2009,(2008: 966). Of those the following held more than 3.0% of the total voting rights:• Alcide Ltd 27.9% (36.0%)• Toyota Industries Corporation 22.5% (0.0%)• Board and Management Members 1) 7.9% (9.5%)• T. Rowe Price International Inc. 4.4% (5.5%)• Bär Marc Philipp 3.1% (3.6%)1)The Board and Management Members do not act as a Group and are therefore not reported to SIX Swiss Exchange asa significant shareholder.96 Uster Group – Notes to the Consolidated Financial Statements 2009

28.2 Transactions with the Board of Directors and the Executive CommitteeCompensation of the Members of the Board of Directors and the Executive CommitteeThe compensation of the Board of Directors and the Executive Committee comprised the following:in CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Short-term employee benefits 3,377 3,287Post-employment benefits 473 682Total 3,850 3,969In addition to their salaries the Members of the Executive Committee have a company car at their disposal.For further information regarding the compensation of the Board of Directors and the Executive Committee,please refer to note 11 Compensation of the Members of the Board of Directors and the Executive Committee ofthe statutory financial statements of Uster Technologies Ltd.Other Transactions with Members of the Board of DirectorsIn his function of a Managing Partner of a consulting company a Member of the Board of Directors advisesthe Company on certain business issues related to China. Also another Board Member delivers consultingservices to the Company from time to time. However, the scope of these consultancy services is not significantand on the same terms and conditions as if they were delivered by third parties.29 SubsidiariesCompanyCountry ofIncorporation% CapitalShareholdingsDec 31, 2009 Dec 31, 2008Uster Technologies de Mexico S. A. de C. V. Mexico 100% 100%Uster Technologies GmbH Germany 100% 100%Uster Technologies (India) Pvt. Ltd India 100% 100%Uster Technologies K. K. Japan 100% 100%Uster Technologies (Shanghai) Co. Ltd China 100% 100%Uster Technologies (Suzhou) Co. Ltd China 100% 100%Uster Technologies Sulamericana Ltda. Brazil 100% 100%Uster Technologies (Thailand) Ltd Thailand 100% 100%Uster Technologies Holding (Thailand) Ltd Thailand 100% n / aUster Technologies, Inc. USA 100% 100%Uster Teknoloji Ticaret A. S. Turkey 100% 100%Uster Group – Notes to the Consolidated Financial Statements 2009 97

Report of the Statutory Auditor on the ConsolidatedFinancial StatementsTo the General Meeting of Uster Technologies Ltd, UsterZurich, 16 February 2010As statutory auditor, we have audited the accompanying consolidated financial statements of Uster TechnologiesLtd, which comprise the statement of comprehensive income, statement of financial position,consolidated statement of cash flows, consolidated statement of changes in equity, and notes on pages 52to 97 for the year ended 31 December 2009.Board of Directors’ responsibilityThe Board of Directors is responsible for the preparation and fair presentation of the consolidated financialstatements in accordance with International Financial Reporting Standards (IFRS) and the requirementsof Swiss law. This responsibility includes designing, implementing and maintaining an internalcontrol system relevant to the preparation and fair presentation of consolidated financial statements thatare free from material misstatement, whether due to fraud or error. The Board of Directors is further responsiblefor selecting and applying appropriate accounting policies and making accounting estimates that arereasonable in the circumstances.Auditor’s responsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audit.We conducted our audit in accordance with Swiss law and Swiss Auditing Standards and International Standardson Auditing (ISA). Those standards require that we plan and perform the audit to obtain reasonableassurance whether the consolidated financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in theconsolidated financial statements. The procedures selected depend on the auditor’s judgment, includingthe assessment of the risks of material misstatement of the consolidated financial statements, whether dueto fraud or error. In making those risk assessments, the auditor considers the internal control system relevantto the entity’s preparation and fair presentation of the consolidated financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internal control system. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of accounting estimates made, aswell as evaluating the overall presentation of the consolidated financial statements. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.OpinionIn our opinion, the consolidated financial statements for the year ended 31 December 2009 give a true andfair view of the financial position, the results of operations and the cash flows in accordance with IFRS andcomply with Swiss law.98 Report of the Statutory Auditor on the Consolidated Financial Statements

Report on other legal requirementsWe confirm that we meet the legal requirements on licensing according to the Auditor Over-sight Act (AOA)and independence (Art. 728 CO and Art. 11 AOA) and that there are no circumstances incompatible withour independence.In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that aninternal control system exists, which has been designed for the preparation of consolidated financial statementsaccording to the instructions of the Board of Directors.We recommend that the consolidated financial statements submitted to you be approved.Ernst & Young LtdDaniel ZauggLicensed audit expert(Auditor in charge)Peter Z. EgliLicensed audit expertReport of the Statutory Auditor on the Consolidated Financial Statements 99

Uster Technologies Ltd – Financial StatementsIncome Statementin CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Gross sales 83,422 134,543Sales deductions -2,770 -1,211Net sales 80,652 133,332Other operating income 4,522 5,348Operating income 85,174 138,680Material expense -27,041 -43,841Personnel expense -17,887 -32,341Depreciation and amortization -14,813 -15,386Other operating expense -17,149 -27,864Operating expense -76,890 -119,432Earnings before interest and tax (EBIT) 8,284 19,248Finance income 462 2,638Finance expense -6,658 -11,839Finance result -6,196 -9,201Earnings before tax 2,088 10,047Taxes -6,782 -3,568Net result -4,694 6,479100 Uster Technologies Ltd – Financial Statements 2009

Balance Sheetin CHF 1,000 Dec 31, 2009 Dec 31, 2008Organizational costs 9,114 10,528Other intangible assets 286,833 297,429Property, plant and equipment 6,122 4,293Financial assets 13 6Investments in subsidiaries 7,368 7,451Loans to group companies 716 2,357Non-current assets 310,166 322,064Inventories 4,625 4,617Receivables trade third parties 9,920 8,143Receivables trade group companies 5,599 4,470Other receivables third parties 865 768Other receivables group companies 765 1,215Prepaid expenses third parties 578 484Prepaid expenses group companies 72 72Cash and cash equivalents 12,002 5,267Current assets 34,426 25,036Assets 344,592 347,100Share capital 79,524 61,664Statutory reserve 422 98Retained earnings 118,032 85,867Net result -4,694 6,479Shareholders’ equity 193,284 154,108Bank loans 115,000 155,000Provisions 1,254 2,735Non-current liabilities 116,254 157,735Bank loans 10,000 10,000Derivative financial instruments 1,900 2,111Payables trade third parties 2,516 3,748Payables trade group companies 948 271Other liabilities third parties 420 993Other liabilities group companies 3,676 6,028Accrued liabilities third parties 14,367 8,221Accrued liabilities group companies 170 270Provisions 1,057 3,615Current liabilities 35,054 35,257Liabilities 151,308 192,992Shareholders’ equity and liabilities 344,592 347,100Uster Technologies Ltd – Financial Statements 2009 101

Uster Technologies Ltd – Notes to the FinancialStatements1 Statement of ComplianceThe financial statements of Uster Technologies Ltd are prepared in compliance with the Swiss Code ofObligations.2 Company InformationSince the initial public offering on October 19, 2007, the shares of Uster Technologies Ltd are listed on themain standard of SIX Swiss Exchange.3 Shareholders’ Equityin CHF 1,000ShareCapitalStatutoryReservesRetainedEarningsTotalBalance at January 1, 2008 65,600 0 85,965 151,565Dividend 1) -3,936 98 -98 -3,936Profit /(Loss) of the year 0 0 6,479 6,479Balance at December 31, 2008 61,664 98 92,346 154,108Balance at January 1, 2009 61,664 98 92,346 154,108Appropriation of retained earnings 0 324 -324 0Capital increase 17,860 0 26,010 43,870Profit /(Loss) of the year 0 0 -4,694 -4,694Balance at December 31, 2009 79,524 422 113,338 193,2841)The dividend has been paid by way of a nominal value reduction.Ordinary Share CapitalOn November 2, 2009, the Uster Group issued 1.9 million newly registered shares with a nominal value ofCHF 9.40 out of the authorized capital. The ordinary share capital of Uster Technologies Ltd as of December31, 2009, amounted to CHF 79.5 million and was fully paid up. It consisted of 8,460,000 registered shareswith a nominal value of CHF 9.40 each (December 31, 2008: share capital of CHF 61.7 million and 6,560,000shares with a nominal value of CHF 9.40 each).Conditional Share Capital IncreaseAs of December 31, 2009, Uster Technologies Ltd had a conditional share capital increase available, pursuantto which the share capital may be increased by a maximum aggregate amount of CHF 3.008 million throughthe issuance of a maximum of 320,000 fully paid registered shares with a nominal value of CHF 9.40 each bythe exercise of option rights which the employees, the Management or Directors of Uster Technologies Ltdor another Group company may be granted in the future.102 Uster Technologies Ltd – Notes to the Financial Statements 2009

4 Pledged AssetsAs of December 31, 2009, none of the assets of Uster Technologies Ltd were pledged (2008: none).5 GuaranteeAs of December 31, 2009, Uster Technologies Ltd did not have any guarantees outstanding (2008: none).6 Fire Insurance Values of Property, Plant and EquipmentThe fire insurance values of property, plant and equipment as of December 31, 2009, amounted to CHF 15.3million (2008: CHF 14.5 million).7 Excess ReservesDuring the financial year 2009 no excess reserves have been reversed (2008: CHF 2.7 million).8 Risk AssessmentRisk management is part of the management process which is defined within the management handbook.All risks / groups of risks are assigned to the process owners of the business processes containing thespecific risk. Strategic risks are directly assigned to the Executive Management Team.The process owners supervise the risks / group of risks and propose process changes if the risks take unexpecteddevelopments. The process changes are approved by the Executive Management Team.The risk management process is reviewed at least once a year by the Board of Directors.9 Significant Shareholders1,017 shareholders were entered in the share register of Uster Technologies Ltd as of December 31, 2009 (2008:966). Of those the following held more than 3.0% of the total voting rights:• Alcide Ltd 27.9% (36.0%)• Toyota Industries Corporation 22.5% (0.0%)• Board and Management Members 1) 7.9% (9.5%)• T. Rowe Price International Inc. 4.4% (5.5%)• Bär Marc Philipp 3.1% (3.6%)1)The Board and Management Members do not act as a Group and are therefore not reported to SIX Swiss Exchange asa significant shareholder.Uster Technologies Ltd – Notes to the Financial Statements 2009 103

10 Investments in SubsidiariesAs of December 31, 2009, Uster Technologies Ltd held the following investments:Company Purpose % CapitalShareholdingsShare CapitalDec 31, 2009 in 1,000Uster Technologies de Mexico S. A. de C. V.(Tlalnepantla, MX) D 100% MXN 6,250Uster Technologies GmbH(Neuss, DE) D 100% EUR 26Uster Technologies (India) Pvt. Ltd(Bangalore, IN) SC 100% INR 4,950Uster Technologies K. K.(Osaka-fu, JP) SC 100% JPY 10,000Uster Technologies (Shanghai) Co. Ltd(Shanghai, CN) D 100% CNY 1,660Uster Technologies (Suzhou) Co. Ltd(Suzhou, CN) TC 100% CNY 20,185Uster Technologies Sulamericana Ltda.(Alphaville-Barueri SP, BR) SC 100% BRL 650Uster Technologies (Thailand) Ltd(Bangkok, TH) SC 100% THB 6,000Uster Technologies Holding (Thailand) Ltd(Bangkok, TH) H 100% THB 1,000Uster Technologies, Inc.(Knoxville, US) TC 100% USD 100Uster Teknoloji Ticaret A. S.(Istanbul, TR) SC 100% TRY 50TC: Technology CenterSC: Service CenterH: HoldingD: Dormant104 Uster Technologies Ltd – Notes to the Financial Statements 2009

11 Compensation of the Members of the Board of Directors and the Executive Committee11.1 Loans and Other PaymentsNo loans to present or former Members of the Board of Directors or Executive Committee were granted oroutstanding as of December 31, 2009 (2008: none).During 2009 payments for consulting services amounting to CHF 10,640 (2008: CHF 5,000) have beenmade to Max-Ulrich Zellweger but no payments to Barry James Mulady (2008: CHF 4,000).11.2 CompensationThe compensation of the Board of Directors and the Executive Committee for the year ending December 31, 2009,was as follows:Board of Directorsin CHF 2009 2008Name Function BaseCompensation(Cash)Bonus(Cash)OtherSocial CostsTotalBaseCompensation(Cash)OtherSocial CostsTotalMax-Ulrich Zellweger Chairman 80,000 50,000 7,125 137,125 94,085 3,939 98,024Ulrich Geilinger Vice-Chairman 1) 0 0 0 0 17,747 1,083 18,830Beat Lüthi Vice-Chairman 2) 50,000 0 3,625 53,625 39,376 2,400 41,776Barry James Mulady Member 50,000 0 3,125 53,125 58,002 3,535 61,537Harald Rönn Member 50,000 0 3,625 53,625 60,131 3,666 63,797Geoffrey Scott 3)MemberTotal 230,000 50,000 17,500 297,500 269,341 14,623 283,9641)Ulrich Geilinger left the Board of Directors at the Ordinary General Meeting held on March 18, 2008.2)Beat Lüthi was elected Member of the Board of Directors by the Ordinary General Meeting held on March 18, 2008.3)The compensation of the executive member of the Board of Directors is shown under the compensation of the ExecutiveCommittee.Uster Technologies Ltd – Notes to the Financial Statements 2009 105

Executive Committeein CHF 2008Name Function BaseCompensation(Cash)Bonus(Cash)PensionBenefitsOtherSocial CostsTotalGeoffrey Scott CEO1)571,900 151,000 77,134 64,193 864,227Other members 2,445,326 461,000 272,716 253,459 3,432,501Total 3,017,226 612,000 349,850 317,652 4,296,728in CHF 2009Name Function BaseCompensation(Cash)Bonus(Cash)PensionBenefitsOtherSocial CostsTotalGeoffrey Scott CEO1)553,045 354,000 77,134 61,028 1,045,207Other members 2,244,504 626,000 177,130 175,345 3,222,979Total 2,797,549 980,000 254,264 236,373 4,268,1861)Including board member fee of CHF 50,000 (2008: CHF 60,138).11.3 Ownership of Uster Shares by the Board of Directors and the Executive CommitteeAs of December 31, 2009, the Members of the Board of Directors and the Executive Committee held thefollowing number of shares of Uster Technologies Ltd:Board of DirectorsName Function Number ofShares owned2009Number ofShares owned2008Max-Ulrich Zellweger Chairman 40,000 20,000Ulrich Geilinger 1)Vice-ChairmanBeat Lüthi 2) Vice-Chairman 0 0Barry James Mulady Member 10,148 10,148Harald Rönn Member 7,000 7,000Geoffrey Scott 3)MemberTotal 57,148 37,1481)Ulrich Geilinger left the Board of Directors at the Ordinary General Meeting held on March 18, 2008.2)Beat Lüthi was elected Member of the Board of Directors by the Ordinary General Meeting held on March 18, 2008.3)The ownership of shares of the executive member of the Board of Directors is shown under the ownership of sharesof the Executive Committee.106 Uster Technologies Ltd – Notes to the Financial Statements 2009

Executive CommitteeName Function Number ofShares owned2009Number ofShares owned2008Geoffrey Scott CEO 213,945 188,000Thomas F. Dressendörfer CFO 10,000 14,000Naiming Wei Asian Operations 100,000 100,000Harold Hoke Sales and Service 92,000 94,000Hossein Ghorashi U. S. Operations 75,000 75,000Renato Murk Order Fulfillment 73,400 73,400Rafael Storz Research and Innovation 32,000 32,000Richard Furter Textile Technology 5,000 5,000Deniz BütünerMarketing andBusiness Development 7,000 5,000Total 608,345 586,40012 Proposal for the Appropriation of Available EarningsThe Board of Directors proposes to appropriate the available earnings as follows:in CHF Dec 31, 2009 Dec 31, 2008Available unappropriated retained earningsBalance brought forward 8,021,470 1,866,270Net result of the year -4,694,262 6,479,158Total available earnings 3,327,208 8,345,428Appropriation retained earningsTransfer to legal reserve 0 -323,958Balance to be carried forward 3,327,208 8,021,470Uster Technologies Ltd – Notes to the Financial Statements 2009 107

Report of the Statutory Auditor on theFinancial StatementsTo the General Meeting of Uster Technologies Ltd, UsterZurich, 16 February 2010As statutory auditor, we have audited the accompanying financial statements of Uster Technologies Ltd,which comprise the income statement, balance sheet, and notes on pages 100 to 107 for the year ended31 December 2009.Board of Directors’ responsibilityThe Board of Directors is responsible for the preparation of the financial statements in accordance withthe requirements of Swiss law and the company’s articles of incorporation. This responsibility includesdesigning, implementing and maintaining an internal control system relevant to the preparation of financialstatements that are free from material misstatement, whether due to fraud or error. The Board of Directorsis further responsible for selecting and applying appropriate accounting policies and making accountingestimates that are reasonable in the circumstances.Auditor’s responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conductedour audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we planand perform the audit to obtain reasonable assurance whether the financial statements are free from materialmisstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor’s judgment, including the assessmentof the risks of material misstatement of the financial statements, whether due to fraud or error. In makingthose risk assessments, the auditor considers the internal control system relevant to the entity’s preparationof the financial statements in order to design audit procedures that are appropriate in the circumstances,but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control system.An audit also includes evaluating the appropriateness of the accounting policies used and the reasonablenessof accounting estimates made, as well as evaluating the over-all presentation of the financial statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.OpinionIn our opinion, the financial statements for the year ended 31 December 2009 comply with Swiss law andthe company’s articles of incorporation.108 Report of the Statutory Auditor on the Financial Statements

Report on other legal requirementsWe confirm that we meet the legal requirements on licensing according to the Auditor Over-sight Act(AOA) and independence (Art. 728 CO and Art. 11 AOA) and that there are no circumstances incompatiblewith our independence.In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm thatan internal control system exists, which has been designed for the preparation of financial statementsaccording to the instructions of the Board of Directors.We further confirm that the proposed appropriation of available earnings complies with Swiss law andthe company’s articles of incorporation. We recommend that the financial statements submitted to yoube approved.Ernst & Young LtdDaniel ZauggLicensed audit expert(Auditor in charge)Peter Z. EgliLicensed audit expertReport of the Statutory Auditor on the Financial Statements 109

Information for InvestorsShare InformationDevelopment of Share Price in CHF3025201510531.01.200928.02.200931.03.200930.04.200931.05.200930.06.200931.07.200931.08.200930.09.200931.10.200930.11.200931.12.200931.01.2010Uster Technologies LtdSPI, rebasedShare Information and Key FiguresThe table below shows the most important information regarding the shares of Uster Technologies Ltd.2009 2008Share capitalNominal value per share CHF 9.40 9.40Shares issued number 8,460,000 6,560,000Issued share capital CHF 1,000 79,524 61,664Free float 49.6% 64.0%Market capitalization and dividendMarket capitalization CHF 1,000 225,882 61,730as % of gross sales 224.2% 39.9%as % of shareholders’ equity 110.9% 38.7%Dividend per share, gross CHF 0.00 0.00Total dividend paid, gross CHF 1,000 0 0Payout ratio 0.0% 0.0%110 Information for Investors 2009

2009 2008Key figures per shareShare price at the end of the year CHF 26.70 9.41Highest share price CHF 27.00 47.70Lowest share price CHF 5.50 5.80Dividend yield 0.0% 0.0%Basic / Diluted earnings per share CHF 0.16 0.81P / E ratio 166.9 11.6Stock Exchange InformationSIX Swiss Exchange Ticker SymbolUSTNSwiss Security Number 3433153ISINCH0034331535Shareholding StructureThe structure of the shareholders entered in the share register is as follows:Shares Shareholders Shares1 – 100 310 30.5% 20,528 0.2%101 – 1,000 573 56.3% 226,954 2.7%1,001 – 10,000 100 9.8% 286,423 3.4%10,001 – 100,000 28 2.8% 1,270,916 15.0%100,001 – 1,000,000 4 0.4% 1,169,490 13.8%> 1,000,000 2 0.2% 4,258,377 50.4%Not registered 1,227,312 14.5%Total 1,017 100.0% 8,460,000 100.0%Important DatesPublication of annual results 2009 March 1, 2010Media and analyst conference March 1, 2010Last day for inscription into the share registerMarch 19, 2010before the Shareholders’ meeting 2010Shareholders’ meeting 2010 March 30, 2010Semiannual results 2010 July 20, 2010Contact for Media, Investors and AnalystsThomas F. Dressendörfer, CFOSonnenbergstrasse 10CH-8610 UsterPhone +41 43 366 36 06Fax +41 43 366 36 54Email investorrelations@uster.comInformation for Investors 2009 111

Key Figuresin CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Jan 1 –Dec 31, 2007Jan 1 –Dec31, 2006 1)Consolidated IncomeStatementGross sales 100,763 100.0% 154,893 100.0% 186,666 100.0% 163,900 100.0%Sales deductions -2,858 -1,925 -3,087 -2,072Net sales 97,905 97.2% 152,968 98.8% 183,579 98.3% 161,828 98.7%Cost of goods sold -41,631 -41.3% -61,952 -40.0% -76,212 -40.8% -62,742 -38.3%Gross profit 56,274 55.8% 91,016 58.8% 107,367 57.5% 99,086 60.5%Marketing and salesexpenses -11,750 -11.7% -19,465 -12.6% -21,433 -11.5% -21,390 -13.1%Research anddevelopment expenses -11,010 -10.9% -19,857 -12.8% -18,645 -10.0% -15,313 -9.3%Management andadministrative expenses -11,245 -11.2% -17,582 -11.4% -15,930 -8.5% -16,699 -10.2%Other income & expenses -14,812 -14.7% -15,212 -9.8% -17,606 -9.4% 400 0.2%Earnings before interestand tax (EBIT) 7,457 7.4% 18,900 12.2% 33,753 18.1% 46,084 28.1%Amortization andrestructuring 14,638 0 19,645 0 18,631 0 109 0Earnings before interesttax and amortization(EBITA) beforerestructuring 22,095 21.9 % 38,545 24.9 % 52,384 28.1 % 46,193 28.2 %Restructuring cost incl.pension expense 614 0 -4,377 0 0 0 0 0Earnings before interesttax and amortization(EBITA) afterrestructuring 22,709 22.5 % 34,168 22.1 % 52,384 28.1 % 46,193 28.2 %Amortization -15,252 -15,268 -18,631 -109Earnings before interestand tax (EBIT) 7,457 7.4% 18,900 12.2% 33,753 18.1% 46,084 28.1%Finance result -7,044 -7.0% -10,211 -6.6% -26,865 -14.4% -4,715 -2.9%Earnings before tax 413 0.4% 8,689 5.6% 6,888 3.7% 41,369 25.2%Income tax 665 161.0% -3,373 -38.8% -3,301 -47.9% -11,412 -27.6%Profit / (Loss) of the year 1,078 1.1% 5,316 3.4% 3,587 1.9% 29,957 18.3%1)Consolidated figures of Uster Technologies Ltd before the secondary buyout by the Management and Alpha Beteiligungsberatung& Co. KG.112 Information for Investors 2009

in CHF 1,000 Jan 1 –Dec 31, 2009Jan 1 –Dec 31, 2008Jan 1 –Dec 31, 2007Jan 1 –Dec 31, 2006 1)Consolidated Cash Flow StatementEarnings before tax 413 8,689 6,888 41,369Adjustments for depreciation, amortization etc. 19,916 30,940 45,274 4,964Change in working capital -3,640 -2,256 -6,986 2,811Income taxes paid -2,411 -4,617 -5,951 -856Cash flow from operating activities 14,278 32,756 39,225 48,288Purchase of non-current assets -3,373 -3,735 -2,969 -3,097Disposal of non-current assets 298 124 828 157Interest received 75 264 125 296Cash flow from investing activities -3,000 -3,347 -2,016 -2,644Proceeds from loans 5,000 1 178,557 125,088Repayments of loans -45,000 -15,000 -296,100 -174,150Proceeds from issue of share capital 43,871 0 97,137 0Costs related to issue of share capital -1,240 0 0 0Nominal value reduction 0 -3,936 0 0Movements in treasury shares 0 0 0 815Interest paid -6,646 -8,478 -19,321 -6,554Cash flow from financing activities -4,015 -27,413 -39,727 -54,801Net change in cash and cash equivalents 7,263 1,996 -2,518 -9,157Operating cash flow generated in % of EBITA 62.9% 95.9% 74.9% 104.5%1)Consolidated figures of Uster Technologies Ltd before the secondary buyout by the Management and Alpha Beteiligungsberatung& Co. KG.Information for Investors 2009 113

in CHF 1,000 2009 2008 2007 2006 1)Balance sheetAssets 404,739 409,805 432,057 437,090Non-current assets 361,269 375,321 391,189 392,967as % of total assets 89.3% 91.6% 90.5% 89.9%Current assets 43,470 34,484 40,868 44,123as % of total assets 10.7% 8.4% 9.5% 10.1%Equity 203,607 159,542 158,594 44,738as % of total assets 50.3% 38.9% 36.7% 10.2%Liabilities 201,132 250,263 273,463 392,352Non-current liabilities 165,692 215,174 231,309 342,121as % of total assets 40.9% 52.5% 53.5% 78.3%Current liabilities 35,440 35,089 42,154 50,231as % of total assets 8.8% 8.6% 9.8% 11.5%Net debt 109,224 156,546 173,412 280,488AR collection period 53 35 31 n / aAP collection period 41 48 52 n / aCapital expenditureIntangible assets -9 -174 -446 0Property, plant, and equipment -3,319 -3,513 -1,991 0Total -3,328 -3,687 -2,437 0EmployeesNumber of employees (FTE) 449 536 529 490Gross sales per employee 224,416 288,979 352,866 n / a1)Consolidated figures of Uster Technologies Ltd (formerly Hercules Holding Ltd) after the secondarybuyout by the Management and Alpha Beteiligungsberatung & Co. KG.114 Information for Investors 2009

Information for Investors 2009 115

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