Ann Annu Annua. nnual Rep nual Repo ual Repor

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1 Ann Annu Annua Annual report nnual Rep nual Repo ual Repor

2 Group Numbers at a Glance & Highlights 2003 Calendar week January 1, 2003 Rohwedder AG acquires the Assembly and Plastics Technology business unit from Siemens Dematic AG, effective January 1, As of April 2003, the subsidiary is renamed Rohwedder Microtech GmbH & Co. KG. 20 May 1, 2003 Rohwedder AG implements the SAP program September 23 26, 2003 Presentation of the newly developed Robofeeder at the MOTEK see the R & D section of the Group Management Report September 30, 2003 Joachim Rohwedder is elected to Chairman of the Board of the Robotics Technology Div. of the German Machine Builders Association (VDMA) for a 3-year Period. Group Numbers at a Glance Reporting in accordance with IFRS Sales Millions of Foreign Sales % Overall Performance Millions of Overall Performance per Employee Thousands of Material Costs Millions of Material Cost Ratio % Human Capital Costs Millions of Human Capital Cost Ratio % Number of Employees as of December 31 Number Average Number of Employees during the year Number Ordinary Operating Results Millions of 3.2 (1.5) Profit / (Loss) for the year Millions of 1.7 (2.1) Balance Sheet Summary Millions of Shareholders Equity Millions of Equity Ratio % Cash Flow Millions of Cash Flow from Sales % Earnings per Share (in accordance with DVFA / SG) 0.31 (0.55)

3 Key Dates for 2004 Date Event May 26, 2004 June 28, p.m. 1 st Quarter 2004 Report Annual General Shareholder Meeting of Rohwedder AG Village Assembly Hall, Bermatingen, Germany August 20, 2004 Half-Year Report 2004 November 22, st through 3 rd Quarter 2004 Report Masthead Publisher & Copyright 2004 Rohwedder AG Kesselbachstraße Bermatingen Tel: +49 (0) Fax: +49 (0) The Rohwedder AG Annual Report is available in both German and English upon request. Concept & Design interstruct AG, Berlin, Germany Text & Editing Martina Röser, interstruct AG Rohwedder AG Investor Relations Layout & Composition Martin Schulz Photography Frank Wölffing-Seelig Typefaces Stool, Meridien

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5 Annual report

6 Contents 4 13 Board of Directors Members of the Board of Directors Interview with the Board of Directors Letter to the Shareholders Snapshots Employees at Work Part Part Part The Rohwedder Group Supervisory Board Members of the Supervisory Board Report of the Supervisory Board Corporate Governance Rohwedder Stock Group Structure

7 Cover 2 3 Group Management Report Overall Economic Development.. 55 Sector Development Operations and Sales Development Earnings Report Segment Report Affiliated Companies Balance Sheet Employees Investments Research and Development Risk Management Risks Inherent in Future Developments Significant Events after the Close of the Fiscal Year.. 64 Outlook Management Report for Rohwedder AG Overall Economic Development. 113 Sector Development Operations and Sales Development Earnings Report Balance Sheet Employees Investments Finance Acquisitions Project Management Research & Development Quality and Process Management Risk Management Risks Inherent in Future Developments Affiliated Companies Outlook Highlights 2003 Group Numbers at a Glance Financial Calendar Masthead Group Financial Statements in Accordance with IFRS Balance Sheet Profit & Loss Statement Cash Flow Statement Changes in Equity Rohwedder AG Financial Statements in Accordance with German Commercial Law Balance Sheet Profit & Loss Statement Notes to Group Financial Statements Independent Auditor s Report Notes to Rohwedder AG Financial Statements Independent Auditor s Report

8 The Board of Directors Joachim Rohwedder Chairman and Chief Executive Officer Age 52 Chairman of the Advisory Board: Rohwedder Pematech GmbH, Rohwedder Microtech GmbH & Co. KG, Rohwedder Inc., Rohwedder Automated Systems Inc., Rohwedder Asia Pacific, Rohwedder Pty. Ltd. Member of the Advisory Board: Asic Robotics AG Additional Responsibilities: Chairman of the Robotics and Automation Association, a division of the German Machine Builders Association (VDMA), Frankfurt, Germany; Member of the Board of VDMA, federal state of Baden-Württemberg, Germany; Vice President of the Chamber of Industry and Commerce (IHK), Bodensee-Oberschwaben, Germany; Chairman of the Advisory Board of Elgo-Elektrik GmbH, Singen, Germany; Member of the Admissions Committee of the Baden-Württemberg Stock Exchange, Stuttgart, Germany Harald Löhle Finance, Controller, Human Capital Age 52 Additional Responsibilities: Managing Director at Rohwedder Visotech GmbH, Member of the Supervisory Board of Roth & Rau AG, Chairman of the Advisory Board of IEF Werner GmbH, Member of the Advisory Board of Rohwedder Inc., Rohwedder Automated Systems Inc. and Asic Robotics AG Schadnusch Nejad Technology & Acquisitions Age 44 Member of the Advisory Board: Rohwedder Pematech GmbH, IEF Werner GmbH, Rohwedder Inc., Rohwedder Automated Systems Inc., Rohwedder Pty. Ltd., Rohwedder Microtech GmbH & Co. KG Additional Responsibilities: Chairman of the Advisory Board of Roth & Rau AG; Managing Director of Rohwedder Visotech GmbH; Teaching Activity: Lecturer at the Technical University in Karlsruhe, Germany

9 ROHWEDDER 4 5 Left to right: Harald Löhle, Schadnusch Nejad and

10 Joachim Rohwedder

11 ROHWEDDER Interview with the Board of Directors 6 7 Mr. Rohwedder, you played a major role in transforming a family-run business into a Group that is active worldwide. Since 1999, the number of employees has more than doubled. How do you evaluate the current situation of the Rohwedder Group? Joachim Rohwedder: Even though the Rohwedder Group operated at a loss in 2002, we were able to achieve positive numbers in The numerous acquisitions we made led to tremendous growth of the Rohwedder Group in the last few years. That is why we need to take time for sustainable consolidation of the Group in 2003 and We will attain significant growth by completely integrating all subsidiaries into the Group, and by taking advantage of the positive effects of the expanded Group. Beginning with the year 2005, the Rohwedder Group will operate with an improved organizational structure. An important prerequisite for attaining this ideal structure is that all of us operate in a global context. Any further expansion of the Rohwedder Group is also contingent upon worldwide economic developments in future years. Transferring know-how between employees of the international subsidiaries is very important for the Group. Mr. Löhle, can you guarantee that this is happening? Harald Löhle: Rohwedder companies that are active in the same business field make their employees available to one another. This is how the exchange of know-how takes place. One example would be the collaboration of Rohwedder AG and Rohwedder Automated Systems, Inc. in the area of assembly systems and support for the automotive industry. Moreover, employees at Rohwedder AG contributed in bringing about the construction of assembly systems at Roth & Rau AG and thereby positioned the company as a comprehensive provider. Additional factors that secure the transfer of knowledge within the Group are, for example, the central departments of IT, Materials Management and Marketing. Headquarters initiates meetings in which executives from the respective departments of the Rohwedder companies exchange information and coordinate future collaboration. Mr. Rohwedder, in December 2003, you started the strategy project Fit for Success. What do you expect to achieve with this project? Joachim Rohwedder: With this strategy project we want to build the foundation for sustainable success within the Rohwedder Group. We are looking at our Group very closely so that we can minimize any weaknesses, and emphasize and build upon specific Rohwedder strengths even more. For example,

12 within the Group, we must take advantage of our synergies in a targeted manner. Moreover, we will set out to clearly identify our core competencies precisely. They will form the basis of our future business activity. The goal of Fit for Success is to implement new approaches that are identified through the project work as quickly and as effectively as possible, in order to permanently increase the earnings growth of the Group and to secure our position worldwide. Mr. Nejad, in doing that, do you see a necessity to change the technology portfolio of the Rohwedder Group in the future? Schadnusch Nejad: In any event, we will complement our technology portfolio and continue to align it with the needs of the customer. The international markets, such as the automotive, electronics and the microelectronics industries continue to develop at a rapid pace. As a consequence, products change. Within the framework of the new strategy project, we are carefully analyzing current developments in technology in further detail. This helps us to determine what is relevant for the Rohwedder Group.

13 ROHWEDDER Can you give some examples of new developments that are important to the Rohwedder Group? Eastern Europe and to make use of the cost advantages for other Rohwedder companies as well. 8 9 Schadnusch Nejad: The steady increase in electronic and software components in the modern automobile is a significant trend. By now, up to 90 different controls are used in cars, such as ABS controls, airbag controls, window closures, parking support controls and navigation systems as well as transmission and steering controls. And the growth in this area will continue. The Rohwedder Group is not ignoring this mega-trend. Instead, it is aligning its technology portfolio with the trend. Because of this, we were able to acquire several new automotive customers for our systems solutions, electronic production, and micro assembly technology areas. Mr. Rohwedder, where do you see additional future growth potential for the Rohwedder Group? Joachim Rohwedder: I am assuming only moderate economic growth in 2004 in Germany, five percent at the most. It is possible however, that the North American economies will improve dramatically. Because of that, I see opportunities in that market for acquiring additional new customers who are suppliers to the automotive industry. In addition to Western Europe, which continues to be very attractive for us, Eastern Europe is developing into a potential future market. Many of our customers are already taking advantage of the lower costs in Eastern Europe. In order to position ourselves to serve our business partners on location, I see it as a necessity for the Rohwedder Group to establish its own locations there in the short to medium term. For that reason, we are in the process of identifying those Eastern European regions in which we can realize significant growth potential. Another promising future market for automation technology in particular in the areas of electronic production and micro assembly is China. We count on continued significant growth of the economy in this area. This is not the only reason why we will open a location in Shanghai in By establishing this new Rohwedder company, we are satisfying the request of a large customer, who has requested that we support him on location. Accordingly, nothing hinders us from entering into the Chinese market of electronic production. Aside from geographic expansion of the Rohwedder Group, the opening up of new sectors could generate interest. At the moment we are conducting an analysis to determine if our knowhow has suitable uses in the biotechnology field. Why should investors buy Rohwedder shares? Joachim Rohwedder: Automation technology continues to be a growth market. After the Rohwedder Group s expansion over the span of several years, we are now in a consolidation phase as mentioned before. We will conclude this consolidation phase in the year Our new strategic alignment will be based on the findings of the Fit for Success project and they will give the Group an even more explicit profile than it has had before. With that additional investment, the attraction for investors will increase. If we consistently take advantage of our core competencies, we will have the potential to become even more profitable and be able to recommence paying dividends in the future. I am also convinced that the Rohwedder Group will establish itself as a global player. We are already maintaining contacts with Eastern European suppliers. Rohwedder AG already procures control cabinets that are built in Poland and component parts that come from Chechnya, for example. In the swift current of the increasing competitive pressures it is necessary to strengthen our focus on

14 Automation Technology Continues to be a Growth Market. Mr. Nejad, what can you tell us about the progress of the Rohwedder Group in the area of automation? Schadnusch Nejad: In my opinion, we have made significant progress in three areas. First, we were able to shorten delivery times, which enabled our customers to realize a quicker time to market. Secondly, we are operating more cost effectively. It is our third measure of progress that we clearly offer our customers more value as we take on complete responsibility for process technologies on an even greater scope. We are particularly focused on this added value, because especially automobile manufacturers will reduce their own services even more in the future. As systems solutions provider, the Rohwedder Group takes the burden off its customers by supplying high quality solutions from one source. We have the competence to offer complete automation solutions, from start to finish. Risk management is of particular significance for such extensive projects. Mr. Löhle, what measures have been taken by Rohwedder AG in 2003, in relation to risk management? Harald Löhle: Our risk management system was expanded significantly along the entire processing chain on the basis of the impending DIN EN ISO 9001:2000 certification. Moreover, every area head independently created a detailed risk analysis. Subsequently, they reported the identified risks to the risk manager so that measures to deflect those risks could be implemented immediately. Mr. Nejad, in which areas is Rohwedder on the cutting edge in technology? Schadnusch Nejad: In our primary business areas we are striving for technological leadership with respect to the competition. We have already been able to demonstrate top performance in several areas: One example is the area of photovoltaics, in the production of systems for industrial coating of crystalline silicon solar cells in the inline process. In this area of technology, we are one of the leaders in the world market.

15 ROHWEDDER Rohwedder s systems for assembly and micro assembly technology also offer our target groups a technological advantage. This is particularly evident in the linkage of system components. The modular construction of Rohwedder automation solutions makes modification and enhancement of the systems possible. This allows for an adaptation of the concepts to the new requirements of each customer. System solutions for plasma, solar and vacuum-coating technology are a segment that has hindered profitability of the Group up to now. This was so, in spite of the innovations in the photovoltaics industry. Mr. Rohwedder, how do you want to lead this segment back to positive returns? Overall, we have had to reduce employees in this area of business in order to adapt our structures to economic conditions. Mr. Löhle, how will equity and liquidity of the Group be strengthened further? Harald Löhle: Because 2004 will be another year of consolidation for the Group, we must generate returns with organic growth, which will strengthen our equity. To secure our liquidity, for example, we are introducing bank financing for large projects. Moreover, in the future we want to offer to our customers not only Rohwedder systems solutions, but also the corresponding financing at the same time. Joachim Rohwedder: Contrary to all forecasts and studies, the photovoltaics segment did not develop as positively in 2003 as had been expected. For example, a subsidy program was cancelled. In the meantime, the modification of the law for renewable energy has formed the basis for renewed market growth. Beginning with 2005, we are counting on a new wave of investments. I see a further uptrend in the sub-segment system solutions for plasma and vacuum-coating technology in 2004 and 2005, as we were able to acquire new customers in this area.

16 Letter to Shareholders Dear Shareholders: At the beginning of fiscal year 2003, we looked at the near future with guarded optimism. In the first half of the year, many projects were on record and gave us reasons for hiring additional specialists. Unfortunately, hope and disappointment are often closely intertwined and these projects did not move forward for various reasons. The desired economic improvement has not taken place in Germany or in Europe. Economic conditions made it difficult for us to close business deals in the course of the year because our customers had to postpone planned investments. In spite of these recessionary tendencies, we were able to keep our promises of the past year. After incurring a loss in 2002, the Group was able to report a profit in However, we were not able to entirely meet our forecast as stated in our 3rd quarter report of Consolidated earnings before interest and taxes (EBIT) of Million 4.6 is under our goal of at least Million 5. On the other hand, our total operating performance of Million exceeded the forecast. Fewer actual billings for systems at Rohwedder AG in Bermatingen were realized than had originally been planned; this contributed to our inability to meet our ambitious EBIT goal. This was due, in part, to delays in systems deliveries and start-ups. We also had to deal with initial difficulties in our subsidiary Rohwedder Pty. Ltd. in Australia; these were in connection with higher costs. Groupe Rohwedder France, in Paris, as well as Marketech, in Minnesota (affiliated with Rohwedder Inc.), also did not meet profit targets for the Rohwedder Group. For this reason, we are planning to close the French company at the end of April 2004 and subsequently serve the French market from our German base. The sale of Marketech is planned for the end of March The consolidation process of the Rohwedder Group that started in 2003, continues in the current fiscal year. On the basis of business development in 2003, the Board of Directors and the Supervisory Board will recommend suspension of the dividend at the shareholders meeting in June. In light of the continuing problematic economic environment, we wish to operate even more cost effectively and efficiently in the future. Many ideas have already been developed in the past fiscal year. We want to turn these ideas into a strategy that empowers the Rohwedder Group for the future in a sustainable manner. A team of executives from Rohwedder companies worldwide has rallied behind the slogan Fit for Success. This team is working on finding new approaches for the Group and we are working together with a Swiss management consulting company on this project.

17 ROHWEDDER In this manner, and working closely with the expanded risk management system, we want to steer the Rohwedder Group in a positive direction. We are in process of building a sound foundation for a secure future with a mixture of experience and new ideas. It is not only our goal to strengthen the existing foundation, but we are also striving for its innovative expansion This expansion includes the opening of a new Rohwedder location in Shanghai in A large customer requested our presence in China so that we can serve it locally at all times. We are also hoping that this will be an ideal entry for us into this fascinating and lucrative market. This shows that our first priority in all of our strategic decisions continue to be our customers. We are striving for the further development of a competent network that responds quickly, a network that offers first-rate solutions to every customer. An important aspect of this effort is the expansion of our partnerships with the individual customers and suppliers. This annual report will give you extensive information about the current status of the Rohwedder Group. Dear shareholders, since the beginning of 2003, Rohwedder share values have not developed in accordance with your, or our, expectations. For example, the share price was under pressure because institutional investors removed small cap stocks from their portfolio. This resulted in the sale of Rohwedder stock. When you make your investment decisions, please consider that Rohwedder AG stock has development potential in the intermediate and long term, in particular as a result of the realignment within the Group. Although we have not reached our ambitious EBIT goal in 2003, the positive trend within the Rohwedder Group is evident. Compared with 2002, for example, our total operating performance has risen 27% and we increased EBIT from a negative 600,000 to a positive Million 4.6. Our employees, my colleagues and I have made it our responsibility to further increase the value of your company and our company. Sincerely, Bermatingen, March 2004 Going forward, we will continue to be a reliable partner for our customers, suppliers and employees and for you, our shareholders. Joachim Rohwedder Chairman and Chief Executive Officer

18 The Supervisory Board Dr. Siegfried Jaschinski CHAIRMAN OF THE SUPERVISORY BOARD Deputy Chairman of the Landesbank Baden-Württemberg, Stuttgart Dr. Wilfried Sihn DEPUTY CHAIRMAN OF THE SUPERVISORY BOARD Deputy Head for Business Management & Logistics, Fraunhofer Institute for Production Technology and Automation, Stuttgart, Germany Dr. Siegfried Goll MEMBER, SUPERVISORY BOARD Chairman of the Board of ZF Friedrichshafen AG

19 ROHWEDDER Report of the Supervisory Board As required by law and by the corporate articles of Rohwedder AG, the Supervisory Board fulfilled its duties in the reporting period. The Supervisory Board provided ongoing consulting support and oversight to company management. It acted on the basis of information it received from the Board of Directors concerning important business policy, business matters that required consent as well as documents presenting current project status, incoming orders, the development of order backlog, revenue and earnings. All deviations from the goals that had been set and the plans that had been made in the individual Rohwedder companies were discussed in detail. The strategic alignment of the Rohwedder Group has always been coordinated with the Supervisory Board. In fiscal year 2003, the Supervisory Board met four times. The meetings took place on February 14, 2003, April 2, 2003, July 14, 2003, and November 10, Some of the focal points of the consultations in the Supervisory Board were the takeover of Siemens Dematic Assembly and Plastics Technology (today it is known as Rohwedder Microtech GmbH & Co. KG) as well as the implementation of the Corporate Governance Code. Beyond that, the Supervisory Board concerned itself with the Financial Statements of Rohwedder AG and the Group and the Management Report for Rohwedder AG, as well as the Management Report for the Rohwedder Group for fiscal year In addition, detailed reports issued by the business management of Rohwedder Automated Systems Inc., Rohwedder, Inc. and Roth & Rau AG were discussed. At the Supervisory Board meeting of November 10, 2003, the Supervisory Board approved the establishment of a Rohwedder company in China. At the Supervisory Board meeting of July 14, 2003, Chairman and Chief Executive Officer Joachim Rohwedder, and the Head of Finance, Harald Löhle, were appointed members of the Board of Directors for another five years. Their contracts were extended accordingly. Dr. Siegfried Jaschinski In addition to the Supervisory Board meetings, the Chairman of the Board informed the Chairman of the Supervisory Board about significant events on an ongoing basis. He regularly discussed business policy with him as well as the financial position of the Group and the individual companies.

20 In accordance with the recommendations stated in the German Corporate Governance Code, the Supervisory Board requested a declaration of the auditor to determine if there are occupational, financial or other relationships between the auditor and the company that could cast doubt on his independence. The Annual Financial Statements of Rohwedder AG and the Group as well as the Management Report for Rohwedder AG and the Management Report for the Rohwedder Group, the auditor s report about the audit of the Annual Report of Rohwedder AG and of the Group have been presented to the members of the Supervisory Board prior to the meeting and were discussed in detail with the Board of Directors at the Supervisory Board meeting of March 29, The auditor also participated in the meeting of the Supervisory Board on March 29, 2004, at which the annual financials were discussed and provided a report to the Board about significant aspects of the audit. The Supervisory Board acknowledged and approved the results of the audit. The Annual Report for the year 2003, the Consolidated Financial Statements as well as the Management Report and Consolidated Management Report have been audited by the auditing and tax consulting firm Dr. Ebner, Dr. Stolz and Partner, Stuttgart, Germany. The audit included the early risk recognition system. The auditors endorsed the reports with an unqualified opinion. The auditors determined that the Board of Directors has implemented an early risk recognition system in accordance with 91 paragraph 2 of German Corporation Law. Stuttgart, March 29, 2004 The Supervisory Board Dr. Siegfried Jaschinski Chairman of the Supervisory Board Independently, the Supervisory Board also audited the Annual Report, the Consolidated Financial Statements, the Management Report and the Consolidated Management Report. No concerns were raised in this independent audit and the Supervisory Board approved the Annual Report as presented by the Board of Directors. As such, annual financial statements were accepted in accordance with 172 of German Corporation Law. Moreover, the Supervisory Board approved the Consolidated Financial Statements. Lastly, the Supervisory Board supported the suggestion of the Board of Directors to suspend dividend payments for fiscal year The Supervisory Board extends its appreciation to all employees and employee representatives, to all managing directors and to the Board of Directors for their commitment and dedication to the Group in support of Rohwedder customers and shareholders during the preceding year.

21 ROHWEDDER Rohwedder AG Bermatingen, Germany

22 Corporate Governance In fiscal year 2003, Rohwedder AG once again paid special attention to transparency and to the responsible discharge of duties in managing the company through its governing bodies. This was done in accordance with the principles enumerated in the German Corporate Governance Code. The goal continues to be an ongoing effort to strengthen the trust institutional and private shareholders are willing to place in the decisions that are being taken at Rohwedder AG. On March 19, 2004, the Board of Directors and the Supervisory Board of Rohwedder AG issued a declaration in accordance with 161 of German Corporation Law. This declaration is also accessible on our website, under Corporate Governance.

23 ROHWEDDER The Board of Directors and the Supervisory Board of Rohwedder AG respectively declare, each of its own accord, that Rohwedder AG complied and continues to comply with the recommendations of the German Corporate Governance Code as issued by the Government Commission on May 21, 2003, with the exception of the following points: Item Rohwedder AG s stock option plan does not contain a cap for extraordinary, unanticipated developments. Item The remuneration of the members of the board of directors is stated in the notes to the consolidated financial statements as one entry. There is no segregation between fixed remuneration, performance-related components or long-term incentives. Item In light of the current size of the supervisory board, the formation of specialty committees, in particular an audit committee, is not practical. Item Remuneration of the members of the supervisory board is fixed and does not contain any performancerelated components. The notes to the consolidated financial statements identify the remuneration of the supervisory board in one entry. Item In accordance with the regulations for stock classification, Prime Standard, the consolidated financial statements will be published within four months of the end of the reporting period, and the interim reports within two months of the end of the reporting period. March 19, 2004 On behalf of the Board of Directors On behalf of the Supervisory Board Joachim Rohwedder Chairman and Chief Executive Officer Dr. Siegfried Jaschinski Chairman of the Supervisory Board

24 Value of Rohwedder AG Shares Compared with the SDAX (Xetra) in Euros ( )

25 ROHWEDDER The Stock The Stock Markets in 2003 The negative trend that had established itself during 2002 in Germany, continued into the year Before the up-trend in March, the DAX sank to an absolute low of points. As the year progressed, investors regained confidence in the stock markets. The most important German stock index, DAX, which stood at 2, points at the beginning of the year rose to 3, points at the end of the year. This resulted in a year-toyear rise of 37.1%, which represents the largest gain in its history. Development of Rohwedder Shares Unfortunately, Rohwedder shares were not able to follow the general uptrend. Instead, they sank in the course of the year to This decline continued into the beginning of fiscal year In addition to the difficult market situation and the closing of several Small Cap funds that sold Rohwedder shares, some of the reasons for this disappointing development of the share price were company-specific. The Rohwedder Group was unable to attain the goals it had set for itself for fiscal year This led to the sale of shares in the year After the expansion strategy of prior years, the Rohwedder Group went through a consolidation phase in fiscal year Management s concentration on the improvement of internal structures and on the efficiency of the Group resulted in shareholders finding it difficult to recognize the future potential of the Group. Currently, managers of the Rohwedder Group are revising the long-term strategic plan. The start of the implementation of this strategy is an important goal of the current fiscal year. Rohwedder AG s strategy also includes improved communications with capital markets. The good market position of the Group, the technical know-how, the strengths of the individual companies of the Rohwedder Group and the improved strategic alignment will become clearer to institutional investors, analysts and private investors through comprehensive information management, in individual discussions and at analysts meetings. The Board of Directors of Rohwedder AG firmly believes that it is once again attractive to invest in Rohwedder shares for the medium and longer term based on the strengths of the Group.

26 The equity capital of Rohwedder AG was raised to Million 5 from Million 4.7 in the elapsed reporting period. The number of outstanding shares now stands at Million 5. At the shareholders meeting in 2003, a decision was made to institute a buy-back program. Under this program, Rohwedder AG purchased 21,150 of its own shares. At the end of the year, Rohwedder AG held 22,575 treasury shares. The buy-back improves the capital structure of Rohwedder AG and the earnings that accrue to the outstanding shares. Rohwedder Shares at a glance CUSIP (ISIN) number (DE ) Trading Symbol RWD RWD trades on the following exchanges: XETRA, Frankfurt, Stuttgart, Trading Segment Prime Standard Issuing Price Price on December 31, Annual High Annual Low 8.00 Capital Stock Million 5.0 shares outstanding Market capitalization as of ( ) Million Stock transfer agent Landesbank Baden-Württemberg (LBBW)

27 ROHWEDDER Shareholders of Rohwedder AG as of Fixed Holdings in total 54.5 % Siemens Aktiengesellschaft e 6.6 % Shareholders with Pooling Agreements Joachim Rohwedder r* 13,365 % Isabel Thommel t* 8,6025 % Walburga Thommel u* 8,6025 % Others i 17,3 % 47,9 % t u r i e o p a Widely held shares 45,5 % as per regulations of the Deutsche Börse SüdKA Südkapitalanlagegesellschaft mbh o* 6,2 % INVESCO Kapitalanlagegesellschaft mbh p * 5,61 % Others a 33,69 % * shareholders with more than 5 % of the vote

28 Group Structure Affiliations Europe 100% 100% 100% e Rohwedder Pematech GmbH Klaus Kroesen Managing Director Radolfzell, Germany r Rohwedder Microtech GmbH & Co.KG Dr. Hans Erne Managing Director Bruchsal, Germany t Rohwedder Visotech GmbH Managing Directors Schadnusch Nejad, Harald Löhle Markdorf, Germany 75% 60% 40% u IEF Werner GmbH Manfred Bär Managing Director Furtwangen, Germany i Roth & Rau AG Management Board Dr. Dietmar Roth, Dr. Bernd Rau Hohenstein-Ernstthal, Germany o Rohwedder Ziegler GmbH Markus Ziegler Managing Director Markdorf, Germany 35% 100% p Asic Robotics AG Flavio Motta Managing Director Burgdorf, Switzerland a Groupe Rohwedder France* Paris, France * The distribution company will close on

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31 ROHWEDDER Group Structure Affiliations Worldwide % 100% 100% e Rohwedder Inc. Birgit (Bee) Westphal ceo Orlando / Florida, USA r Rohwedder Automated Systems Inc. Birgit (Bee) Westphal ceo Markham /Ontario, Canada t Rohwedder Asia Pacific Sven Kleinschmidt managing director Penang, Malaysia 90% 27,9% u Rohwedder Pty. Ltd. Wayne Hogben managing director Scoresby / Victoria, Australia i Fatec Co. Ltd. K. C. Shin managing director Kwangmyung-City, South Korea

32 Group Structure People Dr. Bernd Rau Member of the Board Roth & Rau AG Schadnusch Nejad Member of the Board Rohwedder AG Managing Director Rohwedder Visotech GmbH Birgit (Bee) Westphal ceo Rohwedder Inc. / Rohwedder Automated Systems Inc. Dr. Hans Erne Managing Director Rohwedder Microtech GmbH & Co.KG

33 ROHWEDDER Klaus Kroesen Managing Director Rohwedder Pematech GmbH Joachim Rohwedder Chairman and Chief Executive Officer Rohwedder AG Harald Löhle Member of the Board Rohwedder AG Managing Director Rohwedder Visotech GmbH Manfred Bär Managing Director IEF Werner GmbH

34 Snapshots We would like to introduce some of our employees to our readers. They are the most important resource upon which our Group is built. Each one of them accepts responsibility in his or her area and contributes to the strengths of the Group by providing highly efficient, top-notch performance. Smart individuals are vital for the Rohwedder Group because of the relentless pressure of innovation. Their progressive ideas and convincing concepts and their knowhow have only one goal that is focused on our customers: being ahead automatically by providing leading-edge automation technology. The photographs on the following pages give you a glimpse into the various work processes at Rohwedder. With these, we want to thank all of our employees for their commitment and dedication, for their ideas, and for the motivation with which they perform their jobs each day.

35 ROHWEDDER Rohwedder Employees picture on page Sandra Schömer General Office und Rainer Zdzuj Maintenance 33 Burâk Güvenç Installer 35 Carlos Sancho Design Engineer und Jürgen Kolbus Technical Consultant, SCHUNK GmbH & Co. KG 37 Gerold Witulski Assembly Specialist 39 Alfons Rohner Design Engineer 47 Hasan Mahmic Employee 49 Doris Weber Cafeteria Manager 51 Ralf Sotrel Application Engineer und Andreas May Distribution Manager, Rohwedder Visotech GmbH 53 Günther Muffler Installer 105 Siegfried Haller Head of Applications Engineering 107 Andreas Frey und Michael John SAP Competence Center 109 Martin Heigle Warehouse Specialist 111

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44 The Rohwedder Group in the Course of Time

45 ROHWEDDER The Rohwedder KG Building in Markdorf Automated Testing Station for Testing High Pressure Brake Enhancers Assembly System for Video Cassettes Assembly System for Power and Selection Switches Scara Robot for Circuit Board Handling

46 The Rohwedder Group in the Course of Time

47 ROHWEDDER The Rohwedder Group provides complete solutions from one source The Rohwedder KG Building Group in Markdorf grew out of the Rohwedder KG; a company in the machine To offer comprehensive solutions that meet building industry that made precision tools. In 1956, Karl Beck, the grandfather and the individual needs of our customers has Hans Rohwedder, the father of the current Chairman and Chief Executive Officer, established this company in Markdorf, always been and continues to be our goal. Germany. Joachim Assembly System Rohwedder, for Video Cassettes the son of Hans Rohwedder By Automated 1971, the Testing company Station had 100 employees. The production of specialty machinery had become a fixed for Testing High Pressure Brake Enhancers component of the company s portfolio. Renowned domestic (German) and foreign industrial corporations were the primary customers of the precision products the company produced. became Managing Director of the family-run business in He was a definitive influence in directing the company towards automation technology. In the mid 1980s, specialty machinery generated 70% of the sales volume. The primary focus was now on high quality assembly systems for the automotive supply and the entertainment electronics industry. Moreover, Joachim Rohwedder was the driving force behind the development of this family-run business into a globally active Group. In Assembly 1994, System the company for Power and had Selection locations Switches in Markdorf and in Bermatingen. Today, 14 international companies with approximately 800 employees make up the Rohwedder Group. Today, the Rohwedder Group is one of the leading producers of systems solutions and automation technology. Even Scara Robot though for Circuit the Board Group Handling today is active worldwide and has been listed on the stock exchange since March 2000, the Chairman and Chief Executive wants to maintain the character and culture of a mid-sized company, yet keep a global focus. In spite of every bias against automation technology, we always managed to create new jobs through our strategies and not only in the Rohwedder Group. Through the use of our systems, our customers produce high quality and competitive products of their own in Germany. This is how our partners in business are helping to keep jobs secure within the country, instead of losing them to interests abroad.

48 Technology Portfolio The three main business areas of the Rohwedder Group offer comprehensive automation solutions that consistently orient themselves to the needs of customers: systems solutions for assembly and micro assembly technology, systems solutions for electronic production and for plasma, solar and vacuum-coating technologies. Modern technologies are used to realize Rohwedder systems solutions. Because optimal functionality of the complex systems depends primarily on individual components, we pay particular attention to the precise choice and coordination of suitable production techniques as well as to our partners and suppliers. Beyond that, the Rohwedder Service team guarantees functional security of the systems on location at any time, worldwide. In addition to the systems solutions, Rohwedder customers can take advantage of the know-how of our complementary technologies, vision technology and handling technology.

49 ROHWEDDER Assembly Hall at Rohwedder AG in Bermatingen

50 Technology Portfolio Systems Solutions for Assembly and Micro-Assembly Technology Rohwedder delivers complex assembly and production lines to manufacture high-performance products out of numerous components and modules. Fully automated processes produce toothbrushes, mobile telephones, windshield wipers, automobile transmissions and pneumatic valves of the highest quality. As all Rohwedder assembly systems are optimally modified to the needs of the customer, nearly each production system is uniquely customized. As a leader in assembly technology, Rohwedder plays a decisive role in the developments of micro technology. The company participates as a specialist in the area of automated handling and assembly systems for small and micro-components for the automotive, electronic, telecommunications and micro-system technology sector. Micro-assembly solutions for mechatronic products, precision overmolding technologies, as well as high performance odd-form assembly systems for electronic chips are examples of our core competencies. Rohwedder also has specialized know-how for extremely precise joining and assembly processes for miniaturized modules. Systems Solutions for Electronic Production Whether it is odd-form assembly, depanelization, assembly processes or complex testing processes of electronic modules, Rohwedder delivers semiautomated and fully automated systems solutions of the highest quality worldwide. We design these customized solutions together with our customers and aim for precision-aligned processes that make it possible to produce quickly, cost-effectively and thereby more competitively. We guarantee the high quality of our applications, with process qualifications and the use of FMEA error prevention tools. Our customers come from the various segments of the electronics sector ranging from telecommunications and automotive suppliers, to white goods and industrial electronics, etc.

51 ROHWEDDER Systems Solutions for Plasma, Solar and Vacuum-Coating Technology Plasma and vacuum-coating technologies are becoming more important in various industrial sectors. When surfaces are treated with ions, completely new material characteristics are created. With the aid of plasma and ion-ray procedures, it is possible to create ultra-thin functional layers in thickness ranges from micrometers to nanometers. Rohwedder conceptualizes and produces components and process systems for plasma and ion-ray treatment of surfaces. The range of possibilities includes all modern coating processes and is used in almost all sectors of industry such as micro-electronics, micro-system technology, sensors, optics, photovoltaics, telecommunications, medical technology, energy and aeronautics. Beyond that, Rohwedder develops and produces systems for industrial coating of crystalline silicon solar cells and complete automated solutions for the photovoltaics industry. Complementary Technologies To complement its systems technologies, Rohwedder offers additional know-how in order to optimize automation processes. The complementary technologies are integral parts of the systems solutions and are also offered as separate services. VISION TECHNOLOGY Rohwedder develops and realizes fully automated and partially automated measuring and test systems that are based on PC-controlled video picture analysis. Rohwedder can offer this service across the entire range of modern vision technology solutions, including laser, X-ray and sensor technology. HANDLING TECHNOLOGY The Rohwedder Group has an extensive assortment of handling components, transport and positioning systems as well as palletizers for automation technology at its disposal. Rohwedder produces these products using a modular installation concept that allows for specific configurations which can be adapted to individual customer needs.

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60 Group Management Report

61 The ROHWEDDER Group Overall Economic Development In the course of 2003, the world economy has become more dynamic. The year started sluggish, however, in the spring, the business climate and consumer confidence began to improve and share prices started to gain after a lengthy decline. Contrary to the economic downturn in the year 2000, the upturn in the world economy has not been uniform. USA and Canada The increased economic activity in the United States, which was supported by expansive economic and strong financial policies, was the primary driver for the recovery of the world economy. GDP rose an average of 2.9%. Canada also had a robust economy in 2003 and it continues to be economically stable. Compared to the prior year, GDP rose 3.0% and inflation stood at 2.8%. Western Europe The economies of the industrialized countries of Western Europe labored behind the worldwide economic up-trend in The willingness to make investments and consumer confidence were further burdened by political insecurities brought on by the Iraqi war at the beginning of the year, the SARS epidemic in Asia and the rapid rise of the Euro. After a temporary reduction in spring, oil prices rose once more, although they did not rise above the level at which they had been prior to the war in Iraq. Pulled along by the world economy, Western Europe experienced a slight improvement near the end of the year. The rising trust in the manufacturing and service sectors shows that the improved climate has a positive influence on respective domestic demand. In Italy, GDP rose 0.4%, but in France and Germany it showed no growth and remained at the prior year s level. Germany For the third year in a row, the German economy remained stagnant during Overall economic production receded somewhat in the first half of the year. Primarily responsible were the unfavorable political and foreign trade environment in the whole Euro Zone as well as the strong Euro. Domestic demand fell slightly, particularly due to reduced investments in plant and equipment and negative business expectations. Additionally, the number of people not employed rose and resulting disposable income fell further. General insecurity about the future of the social security system, financial policy and additional reform initiatives, are significant contributors to an increased tendency to save money. The first signs of recovery in the German market became evident in the second half of Increasing demand from foreign countries as well as the economic stimuli of developing countries in Asia, such as China, were the driving forces behind that. The international competitive position of these countries has improved significantly because of their close ties to the weak Dollar. China s real GDP, for example, rose in the course of The insecurity of German business executives gradually gave way to cautiously confident expectations for At the end of 2003, domestic demand began to rise slightly.

62 Sector Development Germany In spite of restrained demand for investment goods, the robotics and automation sector grew in Germany during the last fiscal year. Sales grew by 7 % to Billion 6.5 and exceeded the 2% growth projections of the German Machine Builders Association (VDMA). This sector developed more favorably than machine building and systems construction overall. Among other factors, this is related to the aggressive strategy of new automobile models in the automotive industry during the past year. The automotive industry and its suppliers expect flawless know-how in production technology and they continue to be the most significant users of robots and automation. However, not all companies in the sector were satisfied with Significant variances differentiated individual companies because of their dependence on respective customer sectors and activities in the triad: Europe, US and Asia. Demand for semiconductor equipment continued to be low. The upswing that had been forecast by experts for some time did not take place during the reporting period. USA General economic conditions had a positive effect on the business sector in the United States. Here too, the automotive industry and the automotive supply industry were the driving force behind investments. Asia It is difficult to judge the robotics and automation sector in Asia. The incredible growth factors in 2003 and the inexhaustible demand potential posed considerable difficulties for a mid-sized company to organize a well-functioning distribution process or even to set up production on location. German engineering is prized in China and as a consequence, it is often quickly and comprehensively copied. For mid-sized German companies whose core competence is the area of innovation, this presents a danger for potential product piracy.

63 The ROHWEDDER Group Developments in the sub-sectors of industrial vision technology, assembly and handling technology, robotics and photovoltaics during the course of 2003 Industrial Vision Technology Industrial vision technology experienced double-digit growth of 15 % in Germany during Revenue for the sector stood at Million 833. The automotive industry, the automotive supply industry as well as the electronics industry were the most significant users. In Europe, the sector attained a business volume of approximately Billion 2.1. The world market is distributed fairly evenly between America, Asia and Europe. As a whole, the industrial vision technology sub-sector benefits from advancing automation of production processes and of quality assurance. Assembly and Handling Technology The sector committee for Assembly and Handling Technology of the European Factory Automation Committee (EFAC) estimated revenues for the assembly and handling technology sector in Europe at approximately Billion 10. Germany s share stood at 39% and achieved sales growth of 7% amounting to Billion 3.9. It is noteworthy that there are significant differences between component suppliers and system producers. Most of the former showed double digit growth, whereas system producers were able to show only single digit growth of 2 % or 3 %. In addition to the automotive industry and its suppliers, machine builders as well as the electric and electronics industry are the most important users in this sub-sector. Robotics The German manufacturers of robots were able to increase sales in 2003 by 4% to Billion 1.8. The primary reason for this growth was the consistent implementation of investment plans in the automotive and automotive supply industry. This increased the industry s share of newly installed robots in 2003 by 66%. In total, 13,400 robots (+12%) were installed. This is a record for Germany. Photovoltaics While the photovoltaics business continued to grow at 30% in 2002, further growth had been forecast to remain at that level in In reality, the sector experienced sudden stagnation. Several reasons are behind this development which surprised the entire sector: First, prices for solar modules sank drastically from 3.5 per Watt in 2002 to 2.5 per Watt in This was related to the Japanese market. Second, 2003 experienced an over-capacity of solar cell production in Japan and Europe. A third reason was and is the political insecurity in Germany regarding the German Renewable Energy feed-in Law (REFIT). Because Germany is the global market leader in photovoltaics, this new law has a representative effect worldwide. As a consequence, almost all solar cell producers have stopped planned investments or deferred them to future years.

64 Operations and Sales Development The Rohwedder Group was not able to attain its target for consolidated earnings before interest and taxes (EBIT), of between Million 5 and Million 5.6, as had been announced in the 3rd quarter report of The EBIT for 2003 stood at Million 4.6 compared to a negative 600,000 in the prior year, because the companies Rohwedder AG, Roth & Rau AG, Rohwedder Inc., Groupe Rohwedder France, as well as Rohwedder Pty. Ltd. did not reach their earnings goals. The goal of attaining consolidated earnings between Million 123 and Million 128, however, was exceeded by the Rohwedder Group. It stood at Million compared to Million in the prior year. The new company Microtech GmbH & Co. KG contributed Million 11.4 to consolidated earnings. As Rohwedder Ziegler Fertigungstechnik GmbH, which has been a minority interest of Rohwedder AG since January 1, 2003, and which still belonged to the group of consolidated companies in 2002, earned Million 2.7, the Rohwedder Group was able to post organic growth of Million 18.5 in The Rohwedder Group achieved sales of Million during the reporting period compared to Million during the prior year. Ongoing projects stood at Million 54.1 on December 31, 2003 compared to Million 55.5 in Based on the realignment of the Rohwedder Group as of January 1, 2003, the segments were re-allocated as follows: Sales in the Segments in Millions of Systems solutions for assembly and micro assembly technology Systems solutions for electronic production Systems solutions for plasma, solar and vacuum-coating technology Complementary technologies Earnings The Rohwedder Group achieved earnings from ordinary operations in the amount of Million 3.2 compared with a negative Million 1.5 in Planned depreciation of Goodwill is included in the earnings from ordinary operations, in the amount of Million 1.3 compared to Million 1.0 in Returns on sales from foreign operations stood at 33.2% compared with 33.5% in The annual surplus, prior to subtracting shares of external partners, stood at Million 1.7 compared to a negative Million 2.1 in What is worthy of note is that the annual shortfall in 2002 included an extraordinary write-off of Million 1.5.

65 The ROHWEDDER Group Segment Report In the segment systems solutions for assembly and micro assembly technology Rohwedder was able to acquire Rohwedder Microtech GmbH & Co. KG in January Although it was formerly a part of Siemens, it did not enjoy significant market recognition. This market awareness, however, was significantly increased through intensive work in the German market and resulted in a higher number of inquiries. The company also communicated with its former core customers and informed them about its integration with the Rohwedder Group. As a result, those customers increased their orders. In the sub-segment systems solutions for assembly technology The Rohwedder location in Bermatingen, which primarily serves the German market, was negatively affected by the steadily increasing strength of the competition. The competitive environment forced us to grant price rebates to our customers and that had a negative effect on our margins. Additionally, we experienced delays in systems deliveries. The Rohwedder subsidiary in Canada, which is also a producer of systems solutions for assembly technology, extricated itself from its dependence on the automotive sector. It has done work in promising new markets such as the electronics and the pharmaceutical sectors. Furthermore, for the benefit of our customers, an intensive exchange of technology know-how has been developed between Rohwedder locations in Germany and in Canada. The segment systems solutions for electronic production has developed well, in spite of the difficult market environment. Incoming orders from the telecommunications and automotive supply sectors were particularly good. Long-term development work on a new futuristic mobile telephone testing system came to fruition and this system was successfully implemented in Additionally, a lowcost depanelizer was developed in collaboration with Rohwedder Pematech GmbH and IEF Werner GmbH in order to open new markets for these systems. In the growing automotive supplier sector market, the Rohwedder group gained new customers with its innovative systems solutions. Through cooperative work with the American company Chad, the Rohwedder product range became even broader. Rohwedder distributes odd-form assemblies for this company. In the sub-segment systems solutions for plasma and vacuum-coating technology an agreement spanning five years was signed in 2003 with a large American company. The subject matter of this agreement is the reconstruction of systems. To further support the business activities of Rohwedder in collaboration with Government and important research and development laboratories, a long-term contract was signed with a Lobbyist firm in Washington.

66 The sub-segment, systems solutions for photovoltaics, which we included in the Rohwedder portfolio because of the promising studies about its future development, did not reflect the sales growth it had shown from 2000 until 2002 (which were more than proportional). Added to the unstable economic environment, the unwillingness to invest in the respective markets, particularly in Germany, was an important reason for this negative development. This was discussed in greater detail in the section Sector Development. For this sub-segment of the Rohwedder Group, the stagnation of the sector resulted in sales revenues for 2003 that were only slightly higher than in the prior year, even though photovoltaics has been a part of our technology portfolio since July 2002 only. The fourth business area, complementary technologies is represented by both vision and handling technology. In 2003, vision technology concentrated primarily on the automotive sector, on medical technology and on electronic production. Since these are the most important sectors for the entire Group, synergistic effects could be optimized in collaboration with other business areas. In addition, a large customer with successive results as well as 80% in new customers was won. The market for handling technology was marked by strong purchasing reserve. We countered with increased acquisitions and intensive customer support. Parallel to this, we fostered developments in order to gain competitive advantage. The Federal Ministry for Education and Research sponsored two of these projects. Overall, the complementary technologies segment has developed very positively with respect to the number of projects. This is true even though Rohwedder Ziegler Fertigungstechnik GmbH is no longer a part of the group of consolidated companies (since January 1, 2003), and therefore the sales revenues of this company no longer support this segment. Individual companies of the Group and their respective results were allocated to several segments respectively. The share of the companies on the sub-segments varies significantly from year-to-year and does not allow for a meaningful comparison to the prior year. For this reason, no allocation of debt and assets by segments has been established.

67 The ROHWEDDER Group Affiliated Companies In accordance with International Financial Reporting Standards (IFRS) Rohwedder Pematech GmbH, is active in the business area of systems solutions for electronic production among other fields. It was able to increase its overall earnings by 40% compared to the prior year. In addition to that, it posted an annual surplus of Million 2.2 compared to Million 1.2 in The Canada Holding company s earnings rose 26% compared to The annual surplus of 200,000 remained unchanged compared to Effective January 1, 2003 Rohwedder AG acquired the subsidiaries Rohwedder Microtech GmbH & Co. KG and Rohwedder Microtech Verwaltungs-GmbH. This is the former business unit Assembly and Plastics Technology of Siemens Dematic AG. The acquisition was financed primarily with new shares of Rohwedder AG. To make this possible, the capital of Rohwedder AG was raised from Million 4.7 to Million 5.0 as approved by shareholders at the shareholders meeting. Rohwedder Microtech GmbH & Co. KG earned Million 11.4 in Results of ordinary business activity in accordance with local commercial law stood at zero as a result of offsets to losses by Siemens Dematic. This was done by contractual consent. In accordance with International Financial Reporting Standards (IFRS), earnings stood at The USA Holding company posted earnings of Million 5.5. This was less than earnings posted in 2002 which stood at Million 5.7. The annual shortfall of Million 2.3 in 2002 was reduced to Million 1.1 in 2003 with the help of a reorganization plan. The IEF Werner GmbH, which produces handling components as well as systems solutions for assembly technology was able to increase its earnings by 27% compared with the prior year. The annual surplus stood at 700,000 compared to 300,000 in Roth & Rau AG, which develops systems solutions for photovoltaics, reported only slightly higher earnings of Million 8.0 compared to the prior year. The Million 6.7 it earned in 2002 applied only to six months. For 2003, the annual surplus stood at zero compared to 800,000 in Effective January 1, 2003, Rohwedder AG sold 20% of its shares in Rohwedder Ziegler Fertigungstechnik GmbH and is now a minority shareholder holding 40% of the company. The equity share in Rohwedder Ziegler Fertigungstechnik GmbH and Asic Robotics AG is posted on the balance sheet. The Korean company, Fatec Co. Ltd., is posted at cost. The Balance Sheet The Group s balance sheet stood at Million 93.0 compared to Million 84.2 in The increase was primarily due to the addition of the new company, Rohwedder Microtech GmbH & Co. KG, and increased levels of inventory. Equity increased to Million 35.5 in 2003 compared to Million 31.4 in This corresponds to an equity ratio of 38.1% (prior year: 37.3%) Assets increased to Million 39.4 (prior year: 37.2), most of the increase resulted from the acquisition of Rohwedder Microtech GmbH & Co. KG. Inventory rose to Million 19.3 (prior year: 15.2), and was offset with Million 6.4 in advance payments (prior year: 5.1). Liquidity increased from Million 5.4 in 2002 to Million 8.7 in 2003.

68 Employees On December 31, 2003, the number of employees in the Group had risen to 754 compared to 672 in the prior year. The integration of Rohwedder Microtech GmbH & Co. KG on January 2003 added 87 employees to the Group. The departure of Rohwedder Ziegler Fertigungstechnik GmbH from the consolidated group of companies reduced the number of employees in the Group by 37. Personnel costs amounted to Million 39.9 compared to Million 33.4 in This corresponds to a personnel expense reduction percentage of 31.1% vs. 33.1% in the prior year. During fiscal year 2003, the Group had a total of 37 trainees in business administration and trade, compared with 33 in Investments In fiscal year 2003, Million 8.3 were invested compared to Million 12.5 in Approximately half of this amount corresponded to the acquisition of Rohwedder Microtech GmbH & Co. KG; the remainder applied to general investments. Write-offs were Million 4.2 in 2003 compared to Million 3.5 in Research and Development The central Research and Development Department served the entire Group and had been located at Rohwedder AG headquarters since January As of September 2003, the department was reorganized. Research and Development activities now take place on location under the direction of the respective decentralized business areas. During the 20 months of its existence, the central department, which had three employees, completed the following innovative projects: 1 Development of a fully automated, camera-supported handling system for solar cells, based on robots 2 Continuation of standardization documentation for automation equipment for electronic production 3 Investigation of production technologies of fuel cells for portable or mobile use, while paying particular attention to a possible automation of this technology 4 Development of the Robofeeder a highly flexible, camera-supported robot system for sorting and feeding of components that are present in bulk The Group directly invested Million 3.3 in research and development in 2003 compared to Million 3.0 in Additionally, there were indirect research and development costs because new technologies were developed on the basis of individual customer needs within the framework of ongoing projects. As a result of this closeness to the customer and rapid market development, it is more efficient for the companies of the Rohwedder Group that they undertake their development activities by themselves and move them forward at the convenience of the customer.

69 The ROHWEDDER Group Risk Management Risk management means an active, conscious control of risks with the goal of increasing the Group s performance and its market value. The Board of Directors of Rohwedder AG bears group-wide responsibility for the early recognition of risks that endanger the company, as well as for appropriate countermeasures to be taken. Operational responsibility for risk management rests with the executives responsible for a business area and the managing directors of the subsidiaries. All subsidiaries are obligated to provide qualitative information about opportunities, risks and development trends to the Control Department each month. Through project analysis in the respective areas, it is possible to recognize trends early and to promote general awareness in dealing with risks and opportunities. Being a dynamic process, risk management is subject to permanent controls and continuous improvement of procedural efficiency. In the course of 2003, project management tools already available to the Group were refined and partially updated so that the resulting earnings risk for all projects would be clear at all times. From the point in time that a project is accepted, all possible risks are analyzed and minimized on an ongoing basis. This allows project managers to take countermeasures in a timely manner. To further limit risks, a combination of strategies is employed. We plan to reduce the risk of being dependent on large customers by entering into longerterm contracts. In companies that are subject to large swings in capacity utilization, supplemental orders are being worked out with external resources. At Roth & Rau AG, underutilized capacities that resulted from a lack of orders were offset with personnel adjustments and introduction of the new control cabinet construction business area. All companies in the Group experienced diligent and consistent oversight of security standards in the development and realization of primarily customer-specific systems. Moreover, comprehensive insurance coverage is in place to limit financial consequences and liabilities in the event of large-scale damages.

70 Risks Inherent in Future Developments Risks facing the Rohwedder Group are identified as follows: Customer-specific projects contain ongoing potential risks. As a rule, each automation and assembly system project must be considered as unique regarding technology and process. The advantage of standardization and repeat effects is limited. In addition to that, customers require shortened delivery times to do justice to the time to market. The perpetually increasing technological requirements also contain risks because they demand a higher complexity of assembly processes. The Rohwedder Group must deal with calculation risks in its position as a systems provider that has experienced a higher volume of individual projects. Thereby, the percentage share of individual customers in the Rohwedder Group s overall turnover volume rises. Renewed stagnation of German economic growth is a significant risk that extends beyond the sector. In 2003, this was the reason why many potential customers were less willing to invest. Bad economic conditions in combination with increasing competition intensify the Group s current price pressures. Once again, Rohwedder Inc. in Florida missed its goal of reaching profitability. The negative development of earnings contributed to an increase in debt. We introduced restructuring and personnel measures at Rohwedder Pty. Ltd. in Australia during 2003, to save costs. Future developments contain the risk that balanced results will not be attainable unless a significant number of orders are received by this company, which produces smaller systems for assembly technology. Significant Events After the Close of the Fiscal Year Rohwedder France in Paris, established in 1999, will be closed on April 30, 2004 as a consolidation measure of the Group. We will serve the French market with a French national who will be based in Germany. Experience has shown that this approach is more cost effective for the Group than to maintain a distribution office in France. In March 2004, we will also disengage ourselves from the company Marketech in Minnesota, operating in affiliation with Rohwedder, Inc., as this company has not been profitable. In January and February 2004, large contract closings took place in the systems solutions for assembly and micro assembly technology as well as in the systems solutions for electronic production segments.

71 The ROHWEDDER Group Outlook The recovery of the world economy is expected to continue in 2004, whereby the economic differences between the regions will likely diminish, thereby presenting opportunities for a sustained upswing. Global inequities as well as the fear of unforeseeable political events present risks that have burdened the world economy since September 11, In the US the dynamics of the economic uptrend will slow down in 2004 as tax stimulus wanes. However, the experts project economic growth of 4.5% for the year. The Euro Zone is expected to catch up with the US and Japan in According to economists at the Institute for Economics (IfW) in Kiel, Germany, the economic upswing in Europe will gain momentum over the course of the year. Real GDP in the Euro Zone is expected to increase by 1.7%. The countries that will be joining the European Union also expect tangible economic expansion. In Germany the experts project modest growth in the economy. Little is expected in terms of investment in plant and equipment, since investors are waiting for opportunities in the countries that will be joining the European Union in May Economic stimulation is expected to come from the export sector in Through it, the world economy could have positive impact on Germany through foreign trade. However, an uncertainty factor is the high value of the Euro, which makes it difficult to estimate the Euro s value over the course of the year. The fear that German exports will be under pressure because of the high value of the Euro has not been validated in spite of the negative developments in trade with the United States. Sector and Group In the robotics and automation sector, we are counting on growth of 5% in According to projections of the German Machine Builders Association (VDMA) this sector will continue to grow in the medium term. It will do so significantly above the average of the investment sector since the sector s know-how makes it possible to produce continuous production, which in turn brings innovations to consumers at reasonable prices. For industrial vision technology the experts expect growth of 10% in 2004 to Million 915. There is no end to the growth in this sub-sector as only 15 to 20% of the application areas have been opened up so far. Outside of industrial uses, there is also enormous potential, for example in personal recognition. Assembly and handling technology is expected to increase its sales by 5% to Billion 4.1. It is expected that demand for flexible process-secured assembly systems will rise. Beyond that, production locations in Eastern European countries are becoming more attractive.

72 There, one can count on increasing automation of production processes. It appears that user sectors in the food industry will experience an increasing demand for automation. In the sub-sector robotics, the high number of new start-ups during the last year cannot be expected to recur. Given this background, the German Machine Builders Association (VDMA) projects growth of robot systems at approximately 5% for In upcoming years it should also be increasingly possible to equip small and mid-sized companies with robots. An interesting trend sees robots as personal assistants that directly interact with humans in a joint work environment. In the sub-segment systems solutions for assembly technology of the Rohwedder Group, we are confident that we will be able to profit from the large automobile market in North America. In that market, new models are being actively developed, which opens up opportunities to gain additional automotive suppliers as customers. In this area of the business, the long production times for special machinery projects that could take up to twelve months, could affect returns. That could mean that the Rohwedder Group may have to wait until 2005 before it can post the profits of lucrative contracts. For the sub-segment systems solutions for micro assembly technology we are counting on a broader customer base in the future, as we have successfully strengthened our distribution activities. With respect to the systems solutions for electronic production segment, it is significant to note that our customers in this area are increasing their activities in low wage countries such as China. The response of the Rohwedder Group, is the introduction of a new semiautomatic test solution at a tradeshow in Shanghai, in April This new product makes it possible to lower the testing process costs for local electronic production. Moreover, the Group plans to open a location in Shanghai, in fiscal year 2004, to be able to profit from the current growth in China. A contractual agreement with one of our largest customers guarantees basic capacity utilization of this company for the next few years. There is reason for optimism for the market segment systems solutions for electronic production in Germany, as this business is enjoying uninterrupted growth in mobile telephones and customers are reacting very favorably to our new systems solutions. The very negative development of the last year in the sub-segment systems solutions for photovoltaics, on the other hand, is not expected to experience an up-trend until the second half of The groundwork for further market growth in Germany has been put in place by the new law for renewable energy (EEG) with the so-called Photovoltaics Law. At the same time, there are an increasing number of inquiries from the Asian market that also indicate new vigor for 2004, so that the projected growth of the sector should reappear near the end of The years 2005 and 2006 should experience a new increase in investments. In the sub-segment systems solutions for plasma and vacuum-coating technology, we will redouble our efforts and also work on new markets such as semiconductors and microelectronics in addition to the solar sector. We have already gained new customers in A positive development in this sub-segment will be the impending sale of Marketech, a business unit affiliated with Rohwedder, Inc., as this company has experienced substantial losses in the past. In order to further develop business vision technology in the area of complementary technologies, and use the know-how we have acquired in an optimal way, we will focus on our core competencies with even greater intensity. We intend to increase the value that is added by the vision components, by improving the production of serial systems with the same or similar software. The area handling technology of the fourth Rohwedder segment strives to be a technical leader through fast, standardized product development.

73 The ROHWEDDER Group At this time we are in the process of updating the long-term strategic plan for the Rohwedder Group with the help of a consulting firm. In the fourth quarter of this year, we plan to implement the new strategy within the Group. An essential component of the strategy is optimization of the integration of our subsidiaries. The expansion of our international partner network will continue to progress as well. Large customers, for example, from the communications or automotive supplier industry, are increasingly active on a global scale and that is exactly what they expect from Rohwedder as their systems supplier. Executives from all Rohwedder Group companies are actively participating in this strategy project that will ultimately strengthen the Group. Our business perspective within Germany is affected by the restrained behavior of the economy, which is most likely to continue. We anticipate moderate growth with an overall performance of 5% at most. This estimate supports the current consolidation approach of the Group, which became our top priority in order to improve the profitability of the company after the strong expansion in past years. It is our goal to emerge from this phase as a stronger Group in In addition to organic growth, we can then consider new acquisitions to create value in harmony with our updated strategy Bermatingen, March 26, 2004 Rohwedder Aktiengesellschaft Joachim Rohwedder Chairman and ceo Harald Löhle member of the board Schadnusch Nejad member of the board

74 Year-End Financial Statements for the Rohwedder Group* Balance Sheet Assets 12/31/ /31/2002 in thousands of Current Assets Cash; credit balances at banks 8,702 5,392 Accounts receivable and other assets 28,032 28,142 Inventory 12,936 10,095 49,670 43,629 Capital Assets Intangible assets 18,399 15,244 Property, plant and equipment 19,063 20,598 Financial assets 1,976 1,350 Deferred taxes 2,895 2,322 Other capital assets 1,023 1,014 43,356 40,528 Total 93,026 84,157 * prepared and presented in accordance with International Financial Reporting Standards (IFRS)

75 The ROHWEDDER Group Liabilities 12/31/ /31/2002 in thousands of Current Liabilities Payables for received goods and services 24,256 17,803 Advance payments received 2,408 3,874 Reserves 7,474 5,856 Other current liabilities 4,727 5,142 38,865 32,675 Long-Term Liabilities Long-term bank loans 12,330 13,980 Reserves for leasehold liabilities Deferred taxes 2,483 2,006 Pension reserves 2,439 2,522 17,306 18,588 Equity Subscribed capital 5,000 4,700 Capital reserves 27,497 24,161 Retained earnings 3,343 4,641 Treasury shares (192) (304) Net earnings (160) (1,842) 35,488 31,356 Adjustments for minority shareholdings 1,367 1,538 Total 93,026 84,157

76 Profit & Loss Statement* Rohwedder Group P & L 1/01 12/31/2003 1/01 12/31/2002 in thousands of Sales Revenues 124, ,635 Changes to inventory (finished & unfinished goods) 1,886 (4,773) Additions to plant and equipment 2, Other operating income 3,968 2, , ,387 Cost of materials (68,232) (56,214) Personnel costs (39,931) (33,409) Depreciation of intangible assets (4,224) (4,985) Other operating expenses (15,385) (9,638) Income from shareholdings Interest and similar income Interest and similar expense (1,473) (1,329) Ordinary operating income 3,215 (1,532) Income and sales taxes payable (1,471) (533) Other taxes payable (62) (49) Rohwedder Group net income (net loss) for the year 1,682 (2,114) Earnings due to minority shareholders (144) (431) Rohwedder Group net income (net loss) after minority shareholder allocations 1,538 (2,545) Profit per share (as per IAS33) (in per share) 0.31 (0.55)

77 The ROHWEDDER Group Cash Flow Statement* Cash Flow Statement 12/31/ /31/2002 in thousands of Net income (loss) for the year before minority shares 1,682 (2,114) Depreciation of assets 4,224 4,985 Increases in pension reserves (83) 430 Cash Flow Decreases / (Increases) in inventory (3,771) 5,022 Decreases / (Increases) in accounts receivable and other assets and accruals (1,084) (6,118) (Decreases) / Increases in advance payments received 801 (5,133) (Decreases) / Increases in liabilities including third-party shareholdings 4,414 2,433 Income from shareholdings (158) (291) Foreign exchange translations (722) 534 (Decrease) / Increase in Working Capital (520) (3,553) Cash inflow / outflow from business operations 5,303 (252) Investments in tangible and intangible assets (3,502) (4,354) Financial investments (120) (54) Acquisitions of consolidated businesses (Less cash and cash equivalents) (4,125) (5,656) Credits from the sale of assets Cash outflow as a result of investments (7,723) (10,053) Increases in capital 3,636 0 Distributions to shareholders 0 (922) Distributions to minority shareholders (31) (69) New loans 5,258 8,968 Repayments of existing loans (3,133) (12,006) Cash inflow / outflow as a result of financial activities 5,730 (4,029) (Decreases) / Increases in cash and cash equivalents 3,310 (14,334) Invalid payments in cash and cash equivalents Cash and cash equivalents at the beginning of the period 5,392 19,726 Cash and cash equivalents at the end of the period 8,702 5,392 * prepared and presented in accordance with International Financial Reporting Standards (IFRS)

78 Changes in Equity Capital Statement* 2002 Equity Capital as of January 1, 2002 Changes in Treasury Stock Shareholder Distributions Foreign Exchange Differences Changes in the Cash Flow Hedge Reserves Losses for the Period Equity Capital as of December 31, Increases in Equity Capital Changes in Treasury Stock Foreign Exchange Differences Profits for the Period Equity Capital as of December 31, 2003

79 The ROHWEDDER Group Subscribed Capital Retained Treasury P & L Totals Capital Reserves Earnings Stock Balance 4,700 24,161 5,553 (323) 1,194 35, (922) (922) (801) (801) (111) (111) (2,114) (2,114) 4,700 24,161 4,641 (304) (1,842) 31, ,336 3, (1,298) (1,298) 1,682 1,682 5,000 27,497 3,343 (192) (160) 35,488 * prepared and presented in accordance with International Financial Reporting Standards (IFRS)

80 The Rohwedder Group Notes to the Financial Statements

81 The ROHWEDDER Group A Corporate Objective Rohwedder AG, headquartered in Bermatingen, Germany, is listed in the Commercial Registry at the district court in Überlingen, Germany, under folio number HRB The company s activities include the manufacture of systems solutions for assembly and micro-assembly technology, systems solutions for electronic production and systems solutions for plasma, solar and vacuum-coating technology. An integral part of these systems solutions encompass such complementary fields of endeavor as handling and vision technology. B Accounting Principles Applied The year-end financial statements of the Rohwedder AG corporate group have been prepared and are being published in accordance with International Financial Reporting Standards (IFRS), as of close of business on December 31, 2003, for the fiscal year This is the first time that the year-end financial statements of the Rohwedder AG corporate group have been prepared in accordance with IFRS. Activation of this new accounting method took place on January 1, 2002 (opening balance as per IFRS). Any differences between the year-end financial statements prepared according to German Commercial Law and the balances resulting from application of IFRS accounting methods, as of this date, have been included under equity capital without affecting net income. Accounting framework principles applicable at financial statement cut-off date, as well as IFRS principles of the International Accounting Standards Board (IASB) and the explanatory rules of the Standing Interpretations Committee of the IASB (SIC) were applied in the preparation of these statements. Explanations for the application of extraordinary IFRS principles can be found under the individual year-end financial statement items covered in other areas of these notes. The consolidated year-end financial statements also conform to the requirements of 292a of the German Commercial Code (disenfranchised year-end financial statements). Insofar as they are not explained specifically under individual year-end financial statement items, differences resulting from the balancing, valuation and consolidation methods used in preparing the year-end financial statements through application of 290 ff. of the German Commercial Code are compiled under the heading Differences between the German Commercial Code and IFRS (see item J.2). IFRS 1 is already being used voluntarily, prior to its worldwide effective date of January 1, In comparison to the prior year, uniform balancing and valuation principles were used in the preparation of the year-end financial statements. The year-end financials of the companies making up the Group, and which are included in the Group financial statements, were all prepared using the cut-off date of the Group year-end financial statements. Insofar as no notation to the contrary is made, all values are expressed in thousands of Euros (t ). C Consolidation Principles Applied [1] Group Components in the Consolidation The year-end financial statements of the Group include all entities within the Group in which the Rohwedder AG holds a minimum of 50% interest. The effective date of the initial consolidation is that date on which the Rohwedder

82 AG became a shareholder of at least 50%, either directly or indirectly. As of December 31, 2003, the consolidation group was composed of eight subsidiaries located in Germany and five subsidiaries situated outside of Germany. Payables to minority shareholders are shown separately in both the balance sheet and the P & L statements of the Rohwedder Group. The Rohwedder Microtech GmbH & Co. and Rohwedder Microtech Verwaltungs GmbH subsidiaries, both acquired in 2003, were included in the Group year-end financial statements from January 1, 2003 onwards. A debit difference attributable to Rohwedder Microtech GbmH & Co., dating back to the time of the initial consolidation, arose during the consolidation of investments in subsidiaries for the entities acquired in This debit difference is being depreciated on a straight-line basis over a period of 15 years. On January 1, 2003, Rohwedder AG divested itself of 20% of its shareholdings in Rohwedder Ziegler Fertigungstechnik GmbH, Markdorf (Germany) and since then maintains a 40% shareholding in that company. For the time being, as a result of this reduction in shareholding, that company is no longer being treated as a fully consolidated entity in the year-end financial statements of the Group. The conversion from fully consolidated to the equity method was made without any effect on either profit or loss. As was the case in the prior year, Asic Robotics AG, Burgdorf (Switzerland) has been included in the year-end financial statements of the Group using the equity method. Fatec Co. Ltd., Kwangmyung City (Korea), in which Rohwedder AG has a 27.9% shareholding, has not been included in the year-end financial statements of the Group, similar to the prior year, due to the subordinate nature of the shareholding. [2] Shareholdings Overview Rohwedder Pematech GmbH, Radolfzell, Germany Rohwedder USA Holding, USA (consolidated) Rohwedder Inc., Orlando, USA 1) Rohwedder Canada Holding, Canada (consolidated) Rohwedder Automated Systems Inc., Canada 2) IEF Werner GmbH, Furtwangen, Germany Grundstücksgemeinschaft Rohwedder AG - Manfred Bär- GbR, Furtwangen, Germany Rohwedder Visotech GmbH, Markdorf, Germany Groupe Rohwedder France, Paris, France IEF-HPA Vertriebs GmbH, Wölfersheim-Berstadt, Germany Roth und Rau Oberflächentechnik AG, Hohenstein-Ernstthal, Germany Rohwedder Asia Pacific, Malaysia Rohwedder Pty. Ltd., Australia Rohwedder Microtech GmbH & Co. KG, Germany Rohwedder Microtech Verwaltungs-GmbH, Germany ASIC Robotics AG, Burgdorf, Switzerland Rohwedder Ziegler Fertigungstechnik GmbH, Markdorf, Germany Fatec Co. Ltd., Kwangmyung City, Kyunggi-do, Republic of Korea 1) This company has been consolidated with Rohwedder USA Holding. 2) This company has been consolidated with Rohwedder Canada Holding.

83 The ROHWEDDER Group Shareholdings of Shareholdings of Shareholdings of Shareholdings of Reporting Currency Date of Initial Rohwedder AG Holding USA Holding Canada IEF Werner GmbH Consolidation 100 % 0 % 0 % 0 % EUR 01/01/ % 0 % 0 % 0 % USD 05/23/00 0 % 100 % 0 % 0 % USD 05/23/ % 0 % 0 % 0 % CAD 05/23/00 0 % 0 % 100 % 0 % CAD 05/23/00 75 % 0 % 0 % 0 % EUR 01/01/98 75 % 0 % 0 % 0 % EUR 11/25/ % 0 % 0 % 0 % EUR 07/01/ % 0 % 0 % 0 % EUR 05/01/99 0 % 0 % 0 % % EUR 01/01/99 60 % 0 % 0 % 0 % EUR 07/01/ % 0 % 0 % 0 % MYR 07/01/02 90 % 0 % 0 % 0 % AUD 10/01/ % 0 % 0 % 0 % EUR 01/01/ % 0 % 0 % 0 % EUR 01/01/03 35 % 0 % 0 % 0 % CHF 01/01/02 40 % 0 % 0 % 0 % EUR 01/01/ % 0 % 0 % 0 % KRW

84 [3] Foreign Currency Translations The functional currency concept has been utilized for the translations of the foreign currencies used in the preparation of their balance sheets by the foreign subsidiaries in the Group. As these foreign subsidiaries function as stand-alone entities, they are being treated as foreign entities with regard to IAS21. Conversions of foreign currency amounts from foreign subsidiary balance sheets, for inclusion in the consolidated year-end financial statements of the Group were made as follows: in the case of equity capital, the historic exchange rate was used; in all other cases, the prevailing exchange rate at balance sheet cut-off date was used. Foreign exchange translation differences resulting from such conversions were booked to the account Foreign Exchange Adjustments without any impact on net earnings. Profit & Loss Statement items for 2003 were valued at the prevailing exchange rates at balance sheet cut-off date. Conversions of year-end results were also made at the prevailing exchange rates at balance sheet cut-off date. The following exchange rates versus the Euro were used: Exchange Rates to the Euro Period ending 12/31/ /31/2002 US Dollars (USD) Canadian Dollars (CAD) Swiss Francs (CHF) Australian Dollars (AUD) Malaysian Ringgits (MYR) Transactions in foreign currencies are always booked at the prevailing exchange rate on the date they were incurred. Financial instruments in foreign currencies are converted on balance sheet cut-off date in accordance with IAS32 using an annualized exchange rate. Any resulting exchange rate differences are booked and impact net earnings. Conversions of goodwill items in the balance sheets of the foreign subsidiaries in the USA and Canada were made to the reporting currency using the prevailing exchange rate at the time of incurrence. [4] Consolidation Methods Applied The year-end financial statements of the Group are based on the year-end financial statements prepared on December 31, 2003 by the individual companies within the Group. The simplification rules outlined in IFRS1 were used to account for those shareholdings acquired up to the conversion date of January 01, 2002, so that existing accounting methods in accordance with the German Commercial Code (HGB) could be continued. In these cases, the initial consolidation was made using the book value method. Significant differences for utilization of IAS22 are not present. The determination of such differences would incur an unjustifiable expense. Additions of acquired assets and liabilities to corporate assets and liabilities existing since conversion date to IFRS (January 1, 2002) were booked at the prevailing value at time of incurrence. Insofar as acquisition values of shareholdings exceed the Group holdings in the equity of the individual subsidiaries, they are regarded as goodwill. Disclosed hidden reserves and debts will be carried forward, amortized or liquidated within the framework of the subsequent consolidation of corresponding assets and liabilities. Goodwill is being amortized over a 15-year period using the straight-line accounting method. At the time of acquisition of Roth & Rau AG, minority shareholdings were posted at book value. With respect to IAS22.32, no hidden reserves were disclosed among the minority shareholders. Group-internal sales revenues, expenditures and earnings as well as all payables and receivables between the consolidated companies were eliminated. Interim results arising from assets in inventories due to Group-internal deliveries were eliminated. Deferred taxes resulting from such activity were accrued on the asset side.

85 The ROHWEDDER Group D Balance Sheet Explanatory Notes [1] Acquisition Cost Principle The cost of acquisition principle has been applied in the calculation of the year-end balance sheet. Insofar as no notations to the contrary have been made, assets and liabilities have been reported using nominal values minus any required valuation adjustments. [2] Financial Instruments The valuation of financial instruments such as cash and cash equivalents, payables and receivables arising out of goods received and services rendered, and any other payables and receivables, were calculated at their market values in accordance with IAS39 and took into consideration any significant conditions which could have influenced the respective amounts. Swap contracts were transacted in order to minimize interest loss risks. In accordance with IAS39, these contracts were recorded in the balance sheet at close of business and any changes in market value were booked to reserves against cash flow hedges without any impact on net results. The reserve against cash flow hedges reflected the following changes during the course of the business year: Balance as of 12/31/ Increases 0 Balance as of 12/31/ There were no withdrawals from the reserve in either 2002 or 2003 that impacted results. [3] Liquid Assets The breakdown of cash and cash equivalents, which form the basis of an entity s financial capital, in accordance with IAS7, is reported in the cash flow statement. Current assets encompass credit balances at banks as well as cash-inhand. As of December 31, 2003, liquid assets amounted to t 8,702 (prior year t 5,392). [4] Receivables and Other Assets Short-term Receivables (Composite) 12/31/ /31/2002 Change in thousands of Receivables from delivered goods and services 17,093 20,498 (3,405) Orders in process of being completed 7,585 4,647 2,938 Other property assets 3,020 2, Accruals ,032 28,142 (110) Receivables from delivered goods and services are reported at nominal value. General credit risk items were taken into account through individual valuation adjustments in the amount of t 216 (prior year t 291). Lump-sum valuation adjustments were not made. Foreign currency receivables were converted categorically at the exchange rate prevailing at the time of transaction and later revalued at the exchange rate prevailing at balance sheet cut-off date,

86 in accord-ance with IAS21. The booked difference amount has an impact on net results. Revenues for the sale of manufactured goods are recognized upon transfer of ownership and risk to the customer.if it is anticipated that a customer will take delivery of a completed order, the resulting sales revenues will be booked only at the time of such delivery. To accommodate the reporting of long-term project orders, revenues are booked in concordance with project completion phases ( Percentage of Completion Method ). In such cases, the relationship between already incurred costs versus projected total project costs serves as the basis of calculation. Partial revenues are booked only when at least 50% of the projected total costs have already been incurred. This is done as a pure precautionary measure. The following table shows the amount of the realized partial revenues, the associated costs, the corresponding partial profit and the advance payments received to date. Table Period ending in thousands of 12/31/ /31/2002 Realized partial revenues 13,382 7,553 Associated costs 11,941 6,159 Partial profits 1,441 1,394 Advance payments received 5,797 2,906 No adjustments in valuation were made. Customer receivables, calculated by deducting advance payments received from realized partial revenues, amount to t 7,585 (prior year t 4,647). Other Current Assets (Composite) Period ending in thousands of 12/31/ /31/2002 Deferred taxes 830 1,511 Accounts receivable Travel allowance prepayments Other 2, Total 3,020 2,983 [5] Inventory Raw materials and supplies were valued using actual purchase or manufacturing costs or balanced to a lower realizable net sales price as of balance sheet cut-off date. Guidelines for valuation without incurring loss were observed. Inventory (Composite) Period ending in thousands of 12/31/ /31/2002 Raw materials and supplies 2,682 2,029 Unfinished goods 15,485 10,354 Finished goods and products 531 1,810 Advance payments made ,359 15,170 Advance payments received on orders (6,423) (5,075) 12,936 10,095

87 The ROHWEDDER Group [6] Accruals Accruals on the assets side include expenditures made prior to balance sheet cut-off date, insofar as they represent an expense for a certain period of time after such cut-off date [7] Intangible Assets Acquired intangible assets are booked using actual acquisition costs along with associated overhead. Such items are depreciated on a scheduled basis using the straight-line method of accounting. The schedule of depreciation is based on the anticipated useful life of the item, which, as a rule, encompasses three to seven years. If necessary, nonscheduled depreciation is applied and later reversed when the reasons for such are permanently eliminated. Using the guidelines outlined for the Impairment-Tests in accordance with IAS36, t 1,500 worth of goodwill was depreciated on a non-scheduled basis during R & D expenditures amounting to t 2,094 were capitalized within the Group. These concern developmental costs for products incurred prior to actual start of production. Guidelines in accordance with IAS38.45 were applied. The reported costs were reduced by t 834, the amount of publicly known subventions (concerns the Roth & Rau AG). Reported developmental costs are depreciated, using a straight-line method, over a period of three years commencing with the start of production. No such depreciations were made during the reporting period. Goodwill and other corporate assets arising out of the capital consolidation are reported in accordance with IAS22 and categorically depreciated over a period of 15 years using a straight-line accounting method. A breakdown of these items for the reporting period is shown in the asset analysis. [8] Fixed Assets Fixed asset values are accounted for using acquisition or manufacturing costs minus scheduled straight-line depreciation, in accordance with IAS16. Significant non-scheduled depreciation, in accordance with IAS36, was not necessary. Individual fixed assets are depreciated according to their specific anticipated useful life using a straight-line and pro rata temporis accounting method. The anticipated useful life of plant and office equipment encompasses from three to 16 years. Rented and leased assets, for which all risks and business usages are assumed by the respective, individual companies within the Group (finance leasing), are reported in accordance with IAS17 and depreciated over the anticipated period of useful life of the leased item. Both scheduled, and if necessary, non-scheduled straight-line depreciation is applied. Rental and leasing obligations are reported as liabilities on the asset side and are liquidated through regular periodic payments. Due to their negligible nature, no reallocation of interest or cash value was made. The remaining book value of leased items amounts to t 54 (prior year t 80). Depreciation of leased items amounted to t 26 (prior year t 15). The breakdown of fixed assets for the reporting year can be seen in the asset analysis in this Annual Report. [9] Financial Assets Shareholdings and participations in subsidiary and affiliated companies were calculated on balance sheet cut-off date using historic costs of acquisition. Through reduction of our shareholdings in Rohwedder Ziegler Fertigungstechnik GmbH from 60% to 40%, an at equity consolidation resulted in an asset addition of t 302. The breakdown of our total capital assets structure is reported in the following table:

88 Breakdown of Capital Assets (Composite) in thousands of Intangible Assets Trade Mark rights and similar rights Goodwill Fixed Assets Real Property and buildings Technical installations and machinery Other installations, plant and office equipment and furniture Advance payments made; Works in progress Financial Assets Shareholdings Shareholdings in associated companies Participating interests Loans to affiliated companies Securities *) Reductions amounting to t 1,600 include the capital assets of Rohwedder Ziegler Fertigungstechnik GmbH. Due to the sale of a portion of the shareholdings, the company is no longer fully consolidated, but rather reported as an associated company.

89 The ROHWEDDER Group Acquisition / Foreign Exchange Additions Cumulative Book Value Book Value Fiscal Year Manufacturing Costs Differences Conversions (U) Reductions Depreciation 12/31/ /31/2002 Depreciation , , ,263 *) 2,844 1, ,575 (465) 4, ,408 15,555 13,518 1,424 20,061 (465) 5, ,671 18,399 15,244 2,012 20,099 (8) ,118 15,148 15, (U) 5,085 (68) 461 1,693 2,490 1,295 1, ,671 (36) 1, ,612 2,620 2,990 1, (U) 34,110 (112) 1,942 2,657 14,220 19,063 20,598 2, , ,708 1, , ,976 1, ,521 (577) 8,334 2,949 *) 20,891 39,438 37,192 4,224

90 [10] Deferred Taxes Capitalized under Assets Income and revenue taxes are calculated on results before taxes and are based on the guidelines for tax rates to be applied. Deferred taxes on interim differences between the tax calculation and the consolidated year-end balance sheet are reported using the liability method in accordance with IAS12. Deferred taxes for valuation corrections were applied using a Group-uniform averaged rate of 37%. Accumulated tax deficits are capitalized only in those cases where there is a strong possibility that future taxable income will be on hand to offset such deficits in the near term. Deferred taxes on the asset side are broken down as follows: Deferred Taxes (Composite) Period ending in thousands of 12/31/ /31/2002 Accruals Payables Chargeable losses 2,212 1,713 Capital assets Other Totals 2,895 2,322 [11] Liabilities Short-term payables are broken down as follows: Liabilities Period ending in thousands of 12/31/ /31/2002 Bank loans 12,048 10,824 Payables for goods and services received 12,208 6,860 Payables to affiliated companies Totals 24,256 17,803 Bank loans are categorically calculated on the repayment amounts. Payables for goods and services received are solely to the benefit of third parties. Industry-standard retentions of title apply to any delivered goods. Payables for Goods and Services Rece Period ending in thousands of 12/31/ /31/2002 Totals 12,208 6,860 Of these: Due in less than one year 12,208 6,860 All bank loans mature within one year. Such bank loans are collateralized through commercial real estate holdings, life insurance policies and chattel mortgages.

91 The ROHWEDDER Group [12] Advance Payments Received Advance payments received in amounts corresponding to orders completed to date, are included in the asset side balance for raw goods and materials on hand. The remaining advance payments received are booked on the liability side as open items Breakdown Period ending in thousands of 12/31/ /31/2002 Totals 13,060 11,854 of these, due in less than one year 13,060 11,854 of these, secured through bank guaranties 11,114 6,114 of these, added to raw goods and materials 6,423 5,075 of these, added to receivables 4, of these, booked under liabilities 2,408 3,874 [13] Temporary Accruals Accruals are made at nominal value. Sundry accruals, in accordance with IAS37, cover all recognizable liabilities versus third parties. They are calculated at the anticipated amount of the liability. A composite breakdown of this balance sheet item is shown in the following table: Temporary Accruals as of Applied Liquidations Additions as of in thousands of 01/01/ /31/2003 Tax accruals ,204 1,204 Other Accruals Personnel 2,388 1, ,686 3,047 Outstanding Invoices / Services 1,805 1, ,678 1,691 Guaranties Remaining other ,038 1,038 5,190 4, ,896 6,270 Totals 5,856 5, ,100 7,474

92 [14] Other Short-term Liabilities Breakdown Period ending in thousands of 12/31/ /31/2002 Liabilities versus third-party shareholders Tax liabilities 1,469 2,062 Social security liabilities Accounts receivable 5 19 Other 2,258 2,007 Total 4,727 5,142 [15] Long-Term Loans Long-Term Loan Maturities (Composite) Period ending in thousands of 12/31/ /31/2002 Total 12,330 13,980 Of these, due in one to five year 2,067 5,195 due after five years 10,263 8,785 These loans are collateralized through commercial real estate holdings, life insurance policies and chattel mortgages. [16] Long-Term Leasehold Liabilities Payables for leased assets, which are to be capitalized in accordance with IAS17, were booked as a liability in the amount of the cash value applicable to all future leasing rates. Of the total amount, t 16 (as compared to 57) is due within one year. For reasons of immateriality, no breakdown and reclassification was made. [17] Deferred Tax Liabilities The identified inclusion and valuation differences between the various results which came about due to the adaptation to IAS of the corporate valuations of the companies within the Group, led to deferred tax liabilities in the following items: Deferred Tax Liabilities (Composite) Period ending in thousands of 12/31/ /31/2002 Assets Receivables Accruals Other Total 2,483 2,006 A Group-uniform tax rate of 37 % was used in the calculations. No offset calculation netting deferred taxes on the asset and liability side was made.

93 The ROHWEDDER Group [18] Pension Accruals A company-sponsored pension is based primarily on post-retirement benefits (Old Age Pension; Disability Benefits and Survivor Benefits). As a rule, the pension amount is calculated based on salary and length of service. Reinsurance obligations, pledged in favor of the beneficiary, exist. As the preconditions for the inclusion as Plan Assets have been met, capitalized amounts were offset with reserves. In accordance with IAS19, pension accruals were calculated using the Projected Unit Credit Method. In this way, future obligations were estimated on the basis of partial benefit assessments received up to balance sheet cut-off date. Trend assumptions (salary and pension trends) are taken into consideration at time of calculation Basic Assumptions expressed as a percentage Interest rate 5.5 Salary trend Pension trend 2 Fluctuation rate 0 2 Anticipated income from Plan Assets 5.3 Also taken into consideration in the calculations, were the biometric probability values from the 1998 Actuarial Tables of Prof. Klaus Heubeck. Breakdown of Accruals as of in thousands of 12/31/2003 Defined benefit obligation as of 12/31/2003 3,347 Actuarial losses not taken into consideration (194) Minus current value of Plan Assets (714) Accrual value as of 12/31/2003 2,439 Changes in Accruals during the Reporting Year in thousands of Balance as of December 31, ,522 Net expense as per P & L Statement 89 Minus paid out benefits (22) Minus paid premiums for Plan Assets (net) (150) Balance as of December 31, ,439 Essentially, length of service costs as well as the interest expense, minus the anticipated income from Plan Assets, was used in calculating the P & L amount.

94 [19] Equity Shareholders Equity As of December 31, 2003, ordinary share capital stands at 5,000, It is composed of 5,000,000 shares at no par value, each with a nominal value of 1.00 per share. The Siemens Dematic AG subsidiary Assembly and Plastic Technology (today known as Rohwedder Microtech GmbH & Co. KG), acquired on January 1, 2003, was financed for the most part with new shares issued by Rohwedder AG. For this purpose, the ordinary share capital of Rohwedder AG was increased from 4,700, to 5,000, as authorized at the Annual General Meeting of the Group. The increase in ordinary share capital, from authorized capital, was registered in the Commercial Registry on October 28, Authorized Capital Authorized capital stands at 1,600, (prior year 1,900,000.00) until February 11, Conditional Capital Conditional capital stands at 120, (prior year 120,000.00). In 2000, a stock options program amounting to 120,000 shares of Rohwedder AG stock was started. These options to acquire Rohwedder shares may be granted to members of the Board of Directors (up to 22,000 options), with the exception of Messrs. Rohwedder and Löhle, and to select managerial employees (up to 98,000 options). The stock options program remains in force until Up to the end of December 31, 2003, options for the acquisition of a total of 22,000 shares (prior year 15,000) were granted to members of the Board of Directors and options for 60,300 shares (prior year 55,800) were granted to select managerial employees. The recipients can exercise the options only after a minimum period of three years has elapsed. The option exercise price per share will be based on the average market price per share during the last ten stock trading days prior to the grant of the respective options. Pre(-)conditions for the exercise of the options are that the grantee is still in the employ of the company at the time of exercise and that at least one of two further defined option exercise conditions have been met. The further defined option exercise conditions take into account stock price developments in comparison to the prime rate as well as the profitability status of the company. The first day after the annual General Meeting of the company is the defined option grant day. As an alternative, the option grantee may be paid a cash value equivalent. The Board of Directors is authorized to decide on all further details concerning increases in the conditional capital.

95 Konzern Capital Reserves Capital reserves are primarily based on the value of the shares of the company that is attained above and beyond the nominal or face value at which the shares were issued Retained Earnings Retained earnings include, among others, foreign currency exchange differences amounting to t 1,298 (prior year (801)), which were booked to equity capital without any impact on net income. Treasury Stock In September 2001, the company repurchased 1,500 shares (nominal value 1,500.00) at a price of 23, In December 2001, the company repurchased an additional 20,000 shares (nominal value 20,000.00) at a price of 300, In May 2002, a further 70,000 shares (nominal value 70,000.00) were repurchased at a price of 945, To finance the acquisition of 60% of the shares in Roth & Rau AG, 68,975 shares (nominal value 68,975.00) were sold (price of sale: 999,992.50). In January 2003, 8,900 shares (nominal value 68,975.00) were repurchased at a price of 111, To finance the acquisition of 100% of the shares of the Assembly and Plastics subsidiary of Siemens Dematic AG (today known as Rohwedder Microtech GmbH & Co. KG), 30,000 shares (nominal value 30,000.00) were sold (price of sale: 363,600.00). In November 2003, a further 21,150 shares (nominal value 21,150.00) were repurchased at a price of 179, The company holds 22,575 shares. 22,575 shares amount to 0.5% of the ordinary share capital. The purchase cost for these shares amounts to 194, These shares serve to finance stock option programs and the subsequent potential acquisition of company shareholdings by employees. See financial statement item Changes in Equity Capital to view the various changes for this item.

96 E Profit & Loss Statement Explanatory Notes [1] P & L Statement The P & L Statement is based on the Total Expenditure Format. [2] Sales Revenues Rohwedder AG reports sales revenues in accordance with IAS18. Revenues for the sale of manufactured goods are recognized upon ownership and risk transfer to the customer, if the monetary consideration has been fixed or is determinable by means of a contract and payment of the associated contractual liability is likely. The amount of the proceeds can be determined reliably. Most likely, it is sufficient that Rohwedder AG will receive the commercial benefits from such sale and that any associated costs already incurred or to be incurred can be determined reliably. If it is anticipated that the customer will take delivery, then the associated revenues will be booked only when delivery to the customer takes place. Credits that are granted retroactively, will be deducted. To accommodate the reporting of long-term project orders, revenues are booked in concordance with project completion phases ( Percentage of Completion Method ). In such cases, the relationship between already incurred costs versus projected total project costs serves as the basis of calculation. Partial revenues are booked only when at least 50% of the projected total costs have already been incurred. This is done as a pure precautionary measure. The breakdown of sales revenues was made with respect to the various areas of business activity and is shown in the Explanatory Notes of the Business Segment Report under item H. The identified sales revenues are the result of ordinary business operations. [3] Capitalized Services Capitalized services include, in addition to the cost of R & D, implementation of the new Enterprise Resource Planning (ERP) system named SAP. The man-hour costs required to customize the system for our corporation were calculated and booked using an average hourly rate that is applicable also to the associated manufacturing costs. [4] Other Operating Income Other operating income encompasses primarily income derived from the loss assumption of Siemens Dematic AG, insurance loss compensations, liquidations of accruals, various reimbursements as well as rental income. Siemens Dematic AG has committed to cover in full, the first year Rohwedder Microtech GmbH & Co. KG loss of t 2,215 which was incurred under application of the German Commercial Code. [5] Personnel Costs The information shown includes t 33,569 (prior year 28,738) for wages and salaries and t 5,942 (prior year 4,049) for social security benefits. Old age pension costs amount to t 420 (prior year 622). During the reporting period, the company employed an average of 746 (prior year 622) employees.

97 The ROHWEDDER Group [6] Depreciation of Fixed and Intangible Assets The composition of depreciations made, based on changes in the asset structure of the Group, is shown under item D.9 elsewhere in this Annual Report [7] Other Operating Expenses The largest single items included under other operating expenses are shown in the following table: Other Operating Expenses (Composite) Period ending in thousands of 12/31/ /31/2002 Repairs and maintenance Insurance costs Gas, Electricity, Water, Heating Oil Rents, Leasehold payments 1,992 1,550 Shipping and receiving Travel expenses 2,290 1,993 Sales promotional costs 2,020 1,506 Other 6,465 2,132 Total 15,385 9,638 [8] Other Interest and Similar Income This item concerns interest income on bank credit balances. [9] Interest and Similar Expenses Interest expense was incurred as a result of credit line and bank guaranty usage as well as due to interest payable on leasehold obligations. [10] Income Taxes Expense (Composite) in thousands of Current tax expense (2,068) (646) Deferred tax income (1,471) (533)

98 The difference between actual tax expenses and computed tax expenses, which would be applicable if a taxation rate of 37% were applied, is shown in the following table: Income Taxes in thousands of Group results before income taxes 3,153 (1,581) Computed tax expenses (prior year: tax credits) (1,167) 585 Taxable losses and carry-forwards unaccounted for (478) (585) Elimination of accrued receivables Elimination of income from shareholdings as well as sundry income resulting from equity revaluations (212) (363) Goodwill accruals resulting from consolidation (306) (149) Tax rate differences (172) 1 Non-income-impacting changes in valuations (from Balance Sheet items) 0 (78) Other 48 (53) Computed Tax Expense (1,471) (533) [11] Other Taxes Other taxes consist primarily of vehicle licensing and real estate taxes. [12] Group Profits per Share The average number of outstanding shares during 2003, after deduction of Treasury Shares, was 4,943,442 (prior year 4,661,740). The annualized profit (prior year: annualized loss) after disbursements to other shareholders, amounts to 1,538 (prior year (2,545)). Earnings of 0.31 (prior year ( 0.55)) per share result. A fully diluted earnings per share value was not calculated as the market value on 12/31/2003 stood at less than the fixed option exercise price outlined in the Stock Option Plan.

99 The ROHWEDDER Group F Cash Flow Statement Explanatory Notes The Cash Flow Statement shows changes to the company s cash and cash equivalent status during the course of the reporting year. In accordance with IAS7, a differentiation is made between cash flows resulting from operations, investment and financing activities. Results due to acquisitions are thereby eliminated. Changes as a result of operations activity include sales revenue streams through which cash flow is generated. Also shown in the cash flows of the reporting year are t 1,473 (prior year 1,329) in interest paid and t 70 (prior year 315) in interest received. Income taxes paid are shown as amounting to t 1,168 (prior year 550) and income tax credits received are shown as amounting to t 9 (prior year 18). Changes as a result of investment activity include investments in both fixed and financial assets. Changes as a result of financial activity include primarily new bank loans taken on and old bank loans paid down. Financial assets are equal to the amount of currency on hand as of balance sheet cut-off date (see item D.3 for comparison). Within the framework of the initial consolidation of Rohwedder Microtech GmbH & Co. KG, Bruchsal, assumed property assets amounting to Million 4.2 affect capital assets (t 4.0 of that was Goodwill) and Million 1.5 affect current assets (assumed cash and cash equivalents: Million 0.0). Assumed reserves amounted to Million 0.2 and assumed liabilities amounted to Million 0.4. The purchase price amounting to Million 1.0 was deferred. G Additional Explanatory Notes Regarding Changes to the Group Components in the Consolidation Due to the increase in component companies within the Group consolidation (initial inclusion of two local German companies) during reporting year 2003, concurrent increases resulted in capital assets (Million 4.0), in current assets (Million 3.7), in accruals (Million 0.5) and in liabilities (Million 3.1). The shareholders equity of the Group increased to Million 4.1, primarily due to acquisition activity. In the Group P & L Statement, this initial inclusion resulted in increases in revenues amounting to Million 13.7, in operating costs amounting to Million 13.3, in tax expenses amounting to Million 0.1 and Group profits amounting to Million 0.3. During 2003, the Group divested itself of 20% of its shareholdings in Rohwedder Ziegler. This former Group component company (it is no longer shown in the consolidation) was included in the prior year s consolidated financials with the following values: Million 1.0 in capital assets, Million 0.7 in current assets, Million 0.8 in liabilities and Million 0.1 in reserves. The corresponding amount of shareholders equity was Million 0.8. The prior year s Group P & L Statement included corresponding operating income amounting to Million 0.7, operating expenses amounting to Million 2.6 and taxes amounting to Million 0.0. This company s contribution to Group results (before minority shareholders) amounted to Million 0.1. The year-end financials for this company will henceforth be calculated according to the Equity Method. The divestiture was booked without any impact on the results. (compare with item C.1 )

100 H Explanatory Notes to the Report by Market Segment The breakdown of the reporting by market segment, in accordance with IFRS14 (revised 1997), is shown in the following tables. Highlighted in the first two tables of the report by market segment, is the breakdown for each of the following business segments, by current year and by prior year: Assembly and Micro-Assembly Technology, Electronic Production, Plasma, Solar and Vacuum-coating Technology as well as Complementary Technologies. The numbers are based on individual year-end balances in accordance with IAS and on general consolidation principles. The third table shows a breakdown by region. Plasma, Solar & Report by Market Segment 2003 Assembly and Elektronic Vacuum-coating Complementary Totals in thousands of Micro-Assembly Technology Production Technology Technologies Sales revenues 94,199 18,740 8,894 12, ,679 Intercompany sales (5,718) (3,777) (54) (1,047) (10,596) Group sales revenues 88,481 14,963 8,840 11, ,083 EBIT prior to depreciation for Goodwill 3,997 1,672 (403) 514 5,780 Minority shareholder income (46) 158 Goodwill (599) (103) (588) (34) (1,324) Group EBIT 3,602 1,569 (991) 434 4,614 Current investments 6, , ,335 AfA (depreciation) 1, ,900 AfA Goodwill ,324 Total AfA (depreciation) 2, ,224

101 The ROHWEDDER Group Plasma, Solar & Report by Market Segment 2002 Assembly and Elektronic Vacuum-coating Complementary Totals in thousands of Micro-Assembly Technology Production Technology Technologies Sales revenues 80,873 13,030 8,307 12, ,035 Intercompany sales (5,175) (2,456) (380) (1,389) (9,400) Group sales revenues 75,698 10,574 7,927 11, ,635 EBIT prior to Goodwill accruals 2, (846) 167 1,593 Minority shareholder income Goodwill (339) (255) (1,815) (43) (2,452) Group EBIT 1,969 0 (2,661) 124 (568) Current investments 2, , ,840 AfA (depreciation) 1, ,533 AfA Goodwill , ,452 Total AfA (depreciation) 1, , ,985 Included in the segment Plasma, Solar and Vacuum-coating Technology is a 2002 non-scheduled Goodwill depreciation amounting to Million 1.5. Sales Revenues by Region Period ending in thousands of 12/31/ /31/2002 Local (Germany) 82,907 70,292 Foreign (outside Germany) European Union 8,145 4,809 USA 9,836 6,981 Canada 8,876 1,733 Asia 4, Australia 769 1,088 Other 8, ,176 35, , ,635

102 I Explanatory Notes regarding the Conversion from the German Commercial Code (HGB) to International Financial Reporting Standards (IFRS)* [1] Notes Regarding the Conversion Process The following tables serve to explain the complete conversion process and show the influence of the conversion on the assets, the financial status and the results. All numbers are expressed in thousands of Euros. The resulting changes on the January 1, 2002 conversion date, which took deferred taxes into consideration, were booked under equity capital without any impact on results. Deferred taxes booked as such under equity capital, amounted to Million 0.1. Insofar as changes to the equity capital, which have no impact on results, are given, they are noted as such accordingly in the tables which follow. For a breakdown of the item Deferred Taxes on the asset as well as on the liability sides, please refer to items D.10 and D.17. [2] Changes Affecting Shareholder Equity Treasury shares were discharged from shareholder equity in accordance with SIC16. Receivables from the delivery of goods and from services rendered were adjusted by means of lump-sum revaluations. Foreign currency receivables and liabilities were assessed at the prevailing exchange rate on balance sheet cut-off date. Currency contingent differences arising out of debt consolidation were booked under equity capital, without any impact on results, in accordance with IAS21, insofar as such differences concerned loans to subsidiaries deemed to be long-term investments. Changes in Shareholder Equity (Composite) in thousands of Treasury shares Receivables from goods and services and other fixed assets Goods and raw materials Real property and financial assets Deferred tax credits Total Assets Liabilities Minority shareholdings Deferred taxes Shareholders equity Total Liabilities * Information Reporting as per IFRS1 **) in the case of the first three items on the liability side, a positive entry means a decrease and a negative () entry means an increase in shareholders equity

103 The ROHWEDDER Group Long-term manufacturing orders were valued in accordance with IAS11 (Percentage of Completion Method) and booked under receivables. After taking into consideration the corresponding advance payments received, they were further categorized as receivables resulting from deliveries to customers and from services rendered. In the case of fixed assets, the declining balance method of depreciation used before was converted to the straight-line method of depreciation with retroactive effect on the numbers. Commercial goods of nominal value, which were until now written down in full during the year of acquisition, with impact on the results, will from now on be capitalized and subject to straight-line depreciation over a three-year period. Research and development costs are now being capitalized under intangible assets, insofar as they comply with the guidelines of IAS Deferred taxes are calculated for accumulated deficits, insofar as there is a strong possibility, that future income will be on hand to offset such deficits in the near term. Other reserves were diminished through expense accruals as well as partially through lump-sum reserves made for guaranties. The negative market value for an interest rate swap in the amount of t 111 was booked in 2002 under short-term liabilities; deferred taxes were taken into consideration and the booking had no impact on results. Pension accruals were made in accordance with IFRS guidelines /31/ /31/2002 HGB IFRS Changes in Share- Reclassifications HGB IFRS Changes in Share- Reclassifications holders Equity **) holders Equity **) (323) (304) 0 39,717 39,746 1,192 (1,163) 28,295 34,505 1,765 4,445 6,828 6,598 0 (230) 12,809 10,095 0 (2,714) 29,924 31,939 2, ,938 37, ,247 1, ,322 2, ,792 79,530 4,131 (1,393) 78,346 84,157 4,038 1,773 43,010 41, (1,393) 48,557 49,257 (1,073) (1,773) 1,053 1, ,559 1,538 (21) 0 0 1,328 1, ,006 2, ,729 35,284 2, ,230 31,356 3, ,792 79,530 4,131 (1,393) 78,346 84,157 4,038 1,773

104 The changes to shareholders equity reflect changes in balance sheet items only partially as conversions of various individual balance sheet items were also made. The following table shows such differences in the results for the reporting year 2002: Differences in the Results HGB IFRS Changes in thousands of Sales revenues 102, ,635 2,682 Changes in inventory and capitalized additions to plant and equipment (1,727) (4,585) (2,858) Other operating income 2,635 2,337 (298) Cost of Materials (54,483) (56,214) (1,731) Depreciation of fixed and intangible assets (3,476) (4,985) (1,509) Personnel expense / Pension costs (33,307) (33,409) (102) Other operating expenses (12,817) (9,638) 3,179 Net interest Profit / Loss (706) (673) 33 Results for the year (928) (1,532) (604) Extraordinary Profit / Loss (1,500) 0 1,500 Income taxes (1,093) (533) 560 Other taxes (49) (49) 0 Net earnings after taxes (3,570) (2,114) 1,456 [3] Reclassifications Capitalized reinsurance items shown under other assets as per HGB have been included under pension reserves. Capitalized accruals for discounts on securities and loans were closed out, which led to a corresponding reduction in long-term liabilities. Advance payments received, insofar as they related to long-term manufacturing orders, were converted to receivables. Accruals for Goodwill, shown as extraordinary expense as per HGB, have been booked under accruals as per IAS.

105 The ROHWEDDER Group J Other Explanatory Notes [1] Contingencies and Other Financial Obligations Liabilities as a result of bank loan guaranties amounting to t 3,906 (prior year 4,162) exist on the books of Rohwedder AG. Of these, t 3,591 (prior year 4,162) are in connection with subsidiaries. The remaining financial obligations have residual terms to maturity as follows: Other Financial Obligations Maturing in Maturing in Total in thousands of Rent 1,639 5,382 7,021 Leasehold obligations Service agreements Totals 2,351 6,173 8,524 [2] Differentiations Between HGB and IFRS (Specifications as per 292a of HGB) Contrary to HGB guidelines that stipulate the lowest value translation for receivables and the highest value translation for payables, in the foreign currencies, such items have been translated categorically, in these financial statements, at exchange rates prevailing on balance sheet cut-off date. Any corresponding profits or losses were booked with impact on the final results. Amounts for long-term manufacturing orders were calculated using the PoC (Percentage of Completion) method. Corresponding profits were booked with impact on final results. Research and development costs were capitalized under intangible assets, insofar as they complied with the guidelines under IAS Furthermore, contrary to HGB, considerations for the future application of tax losses carried forward were capitalized. Lump-sum revaluations for receivables from manufactured goods delivered to customers and from services rendered that were made in accordance with HGB guidelines, were closed out with impact on final results. Payables and receivables in foreign currency amounts have been valued using cut-off date exchange rates. Changes in capital have resulted, for the most part, due to capitalization of nominal commercial goods and the corresponding straight-line depreciation over a period of three years. The remaining accruals were booked net of internal acquisition costs as well as partially net of lump-sum guaranty reserves, with a resulting increase to profits. Pension accruals were made in accordance with IFRS guidelines. Some commercial accounting software leased by the company for use in the Finance Division as well as enterprise planning resource systems were capitalized and the corresponding payables booked under liabilities. The asset value of assigned reinsurance amounts was transferred to pension accruals on the liability side. Treasury shares were discharged with negative impact to shareholders equity.

106 [3] Relationships with Affiliated Companies and Persons Board of Directors Joachim Rohwedder Chairman and Chief Executive Officer Harald Löhle Member of the Board of Directors, Finances, Controller, Personnel Schadnusch Nejad Member of the Board of Directors, Technology, Acquisitions Remunerations to the Board of Directors amount to t 802 (prior year 755). Additionally, during the reporting year, one member of the Board of Directors received 7,000 options to purchase Rohwedder AG shares. The strike price of the options corresponds to the prevailing market price of the shares on the day of issuance of the options. The total benefits to members of the Board of Directors are composed of fixed and variable elements. As the variable benefits are based on a percentage of the profits of Rohwedder AG for the reporting year, no variable benefits were paid out during As of December 31, 2003, members of the Board of Directors hold, either directly or indirectly, the following amounts of shares and options to buy shares of Rohwedder AG: Members of the Board of Directors hold Shares Options in actual shares Joachim Rohwedder 668,220 0 Harald Löhle 160,000 0 Schadnusch Nejad 0 22,000 Supervisory Board Dr. Siegfried Jaschinski (Certified Business Administrator) Chairman of the Supervisory Board Deputy Chairman of the Board of the Landesbank Baden-Württemberg, Stuttgart, Germany Chairman of the Supervisory Board of the Stock Exchange Stuttgart AG, Stuttgart, Germany Chairman of the Supervisory Board of the SüdKA SüdKapitalanlagegesellschaft mbh, Frankfurt Member of the Supervisory Board of the Vorarlberger Landes- und Hypothekenbank AG, Bregenz, Austria Member of the Supervisory Board of the AdCapital AG, Berlin, Germany Member of the Supervisory Board of the Deka Investment GmbH, Frankfurt, Germany Dr. Wilfried Sihn (Certified Industrial Engineer) Deputy Chairman of the Supervisory Board Deputy Head, Business Management and Logistics, Fraunhofer Institute for Production Technology and Automation, Stuttgart, Germany Deputy Chairman of the Supervisory Board of the AddOn AG, Pforzheim, Germany Deputy Chairman of the Supervisory Board of the Wittenstein AG, Harthausen, Germany Deputy Chairman of the Supervisory Board of the exis AG, Stuttgart, Germany Member of the Supervisory Board of the Bertrandt AG, Ehningen, Germany Member of the Supervisory Board of the ITAC AG, Dernbach, Germany

107 The ROHWEDDER Group Dr. Siegfried Goll (Certified Engineer) Member of the Supervisory Board Chairman of the Supervisory Board of the ZF Friedrichshafen AG, Germany Chairman of the Supervisory Board of the ZF Sachs AG, Schweinfurt, Germany Chairman of the Supervisory Board of the ZF Lemförder Metallwaren AG, Germany Chairman of the Supervisory Board of the ZF Getriebe GmbH, Saarbrücken, Germany Chairman of the Supervisory Board of the ZF Passau GmbH, Germany Member of the Supervisory Board of the ZF Lenksysteme GmbH, Schwäbisch Gmünd, Germany Member of the Advisory Board of the Zeppelin Luftschifftechnik GmbH, Friedrichshafen, Germany Member of the Advisory Board of the fka Forschungsgesellschaft Kraftfahrwesen mbh, Aachen, Germany Member of the Board of ZF AG Holding Inc., Florence, USA Member of the Board of ZF CVT Partner Co. LLC, Florence, USA Remunerations to the Supervisory Board amounted to t 45 (prior year 45). As of December 31, 2003, members of the Supervisory Board of Rohwedder AG hold the following amount of shares in Rohwedder AG: Members of the Supervisory Board hold Shares Options in actual shares Dr. Wilfried Sihn [4] Declaration in Accordance with the German Corporate Governance Code, 161 German Corporation Law (AktG) The Board of Directors and the Supervisory Board have made the declarations in this report in accordance with 161 German Corporation Law (AktG) and have made them permanently available to shareholders on the corporate website. Bermatingen, March 26, 2004 Rohwedder Aktiengesellschaft Joachim Rohwedder Chairman and ceo Harald Löhle member of the board Schadnusch Nejad member of the board

108 Independent Auditor s Report We have audited the consolidated annual financial statements including the accounting of the Rohwedder AG Group, Bermatingen, Germany, and the group management report for the financial year January 1 through December 31, Preparation of these documents is the responsibility of the Board of Directors of the company. It is our responsibility to provide an independent assessment of the consolidated annual financial statements of the Group and of the Group management report, based on the audit that we have performed, to ensure that these were made in accordance with International Financial Reporting Standards (IFRS). We conducted our audit of the consolidated annual financial statements based on the German auditing standards set by the German Institute of Certified Public Accountants (IDW) as well as on the auditing standards set by the International Auditing Standards (ISA) Association. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements of the Group, as well as management s discussion of operating results are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements and the management s discussion of the Group. The audit includes an assessment of the annual financial statements of the companies that are included in the consolidated statements, the definition of the scope of consolidation, the accounting and consolidation principles applied, and significant estimates by the Board of Directors, as well as an evaluation of the overall presentation of the consolidated annual financial statements and management s discussion of operating results. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated annual financial statements present a true and fair view of the net worth, financial position and earnings of the Group and are in compliance with International Financial Reporting Standards (IFRS). Our audit, based on the consolidated annual financial statements and management report of the Group as prepared by the Board of Directors of the Company for the reporting period from January 1, through December 31, 2003, has provided no reason for objection. The Group management report gives an overview of all pertinent representations of the Group and a fair description of any risks related to future development. Moreover, we confirm that the consolidated annual financial statements and management report of the Group for the reporting period from January 1, through December 31, 2003, are in compliance with the guidelines for exemption from preparation of Group annual financial statements and a Group management report under German Commercial Law. Stuttgart, March 26, 2004 Dr. Ebner, Dr. Stolz und Partner GmbH auditing firm tax consulting firm Dr. Wolfgang Russ Certified Accountant Dr. Volker Hecht Certified Accountant

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