Annual Report 2000/2001

30 40 50 

Leica Geosystems – 

Capture new dimensions. 

Annual Report 2000/2001 

Geosystems

Under the safe harbor provisions 

of the U.S. Private 

Securities Litigation Reform 

Act of 1995, we caution 

investors that all statements 

other than statements of 

historical fact included in this 

document, including without 

limitation, those regarding 

our financial position, business 

strategy, plans and 

objectives of management 

for future operations (including 

development plans and 

objectives relatin to our existing 

and future products), are 

forward-looking statements. 

Such forward-looking statements 

involve known and 

unknown risks, uncertainties 

and other factors, which may 

cause our actual results, performance 

or achievements, 

or industry results, to be 

materially different from any 

future results, performance 

or achievements expressed 

or implied by such forwardlooking 

statements. Such forward-looking 

statements are 

based on numerous assumptions 

regarding our present 

and future business strategies 

and the environment in 

which we expect to operate 

in the future. Important factors 

that could cause our 

actual results, performance 

or achievements to differ 

materially from those in the 

forward-looking statements 

include, among other factors: 

(i) our ability to develop and 

introduce new products and 

technologies that gain market 

acceptance on a timely basis; 

(ii) our ability to respond to 

competitive challenges, such 

as the introduction of innovative 

products or technologies 

by our competitors; (iii) our 

ability to identify and realize 

growth opportunities; and 

(iv) overall levels of investment 

in infrastructure and 

capital spending in our markets. 

Additionally, any forward-looking 

statements 

speak only as of the date of 

this document. We expressly 

disclaim any obligation or 

undertaking to release publicly 

any update of or revisions 

to any forward-looking 

statement contained herein 

to reflect any change in our 

expectations with regard 

hereto or any change in 

events, conditions or circumstances 

on which any such 

statement is based. 

Financial Statements 

Contents 

44 Consolidated Balance Sheets 

45 Consolidated Statements of Income 

46 Consolidated Statements of Cash Flows 

47 Consolidated Statements 

of Shareholders’ Equity 

48 Notes to the Consolidated 


81 Report of the Group Auditors 

Leica Geosystems Holdings AG 

82 Balance Sheets 

83 Statements of Income 

84 Notes to the Financial Statements 

86 Report of the Statutory Auditors 

Other Accounting Information 

87 Normalization

Financial Statements LEICA GEOSYSTEMS HOLDINGS AG Consolidated Financial Statements 

Leica Geosystems | 44 

CONSOLIDATED BALANCE SHEETS 

as of March 31, 1999, 2000, and 2001 (in thousands unless otherwise specified) 

Note 1999 

March 31, 

2000 2001 

CHF CHF CHF 

ASSETS 

Current assets 

Cash and cash equivalents 2'320 3'147 3'152 

Trade accounts receivable (4) 110'287 117'542 144'155 

Inventories (5) 104'926 105'655 140'762 

Prepayments and accrued income 5'404 4'764 8'374 

Other current assets 4'776 7'699 10'505 

Total current assets 

Non-current assets 

227'713 238'807 306'948 

Property, plant and equipment (6) 131'669 127'750 127'911 

Goodwill (7) 138'733 131'618 241'209 

Other intangible assets (8) 25'100 34'139 57'036 

Investments in associates (9) 2'413 3'874 10'458 

Deferred taxes (20) 8'254 12'260 13'933 

Other non-current assets 2'535 2'790 1'467 

Total non-current assets 308'704 312'431 452'014 

TOTAL ASSETS 536'417 551'238 758'962 

LIABILITIES AND SHAREHOLDERS' EQUITY 

Current liabilities 

Bank overdrafts 2'751 177 315 

Loans and borrowings (12) 143'124 1'826 1'198 

Trade accounts payable (10) 44'999 50'303 63'980 

Advance payments 10'014 8'632 7'072 

Accrued compensation 28'928 34'910 39'418 

Other accrued liabilities 19'066 12'439 18'221 

Provisions (14) 4'775 7'238 7'898 

Corporate tax, current 3'558 8'708 4'529 

Other current liabilities (11) 8'549 15'246 13'471 

Total current liabilities 265'764 139'479 156'102 

Non-current liabilities 

Loans and borrowings 

Revolving Credit Facility (12) 53'404 36'497 91'695 

9 7/8% Notes (12) - 153'531 96'123 

Vendor Note (12) 30'675 34'660 - 

Advance payments 9'803 3'634 - 

Pension obligations (22) 26'567 22'975 17'846 

Deferred taxes (20) 29'606 30'627 25'937 

Other non-current liabilities 1'388 66 7'585 

Total non-current liabilities 151'443 281'990 239'186 

Total liabilities 417'207 421'469 395'288 

Commitments and contingencies (15) - - - 

Shareholders' equity 

Share capital (17) 75'000 75'000 108'108 

Share premium 75'000 - 209'317 

Reserves - 74'099 74'099 

Accumulated deficit (35'151) (31'774) (43'267) 

Cumulative foreign currency translation adjustment 4'361 12'444 15'417 

Total shareholders' equity 119'210 129'769 363'674 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 536'417 551'238 758'962 

ACCORDING TO INTERNATIONAL ACCOUNTING STANDARDS (IAS) 

THE ACCOMPANYING NOTES FORM AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS.

LEICA GEOSYSTEMS HOLDINGS AG Consolidated Financial Statements 



CONSOLIDATED STATEMENTS OF INCOME 

For the periods from April 1, 1998, through October 2, 1998, and October 3, 1998 through March 31, 1999, 

and for the years ended March 31, 2000 and March 31, 2001 

(in thousands, except share data) 

Predecessor Successor 

For the period For the period 

April 1, 1998 October 3, 1998 Year ended Year ended 

to October 2, to March 31, March 31, March 31, 

Note 1998 1999 2000 2001 

CHF CHF CHF CHF 

Sales (18) 227'151 243'052 539'732 642'425 

Cost of sales (122'100) (171'696) (278'407) (327'828) 

Gross profit 105'051 71'356 261'325 314'597 

Research and development costs (14'780) (14'966) (36'021) (38'400) 

Selling and marketing costs (51'311) (55'584) (135'993) (152'412) 

General and administrative costs (18'949) (19'670) (45'591) (58'555) 

Other operating income/(expense) net (2'476) (2'678) (6'806) (9'144) 

Gain/(loss) on disposal of property, 

plant and equipment net 175 182 (279) 481 

Operating profit/(loss) 17'710 (21'360) 36'635 56'567 

Net income/(loss) from associated companies (9) 2'685 554 3'070 (999) 

Finance costs (19) (2'726) (25'793) (30'057) (67'112) 

Income/(loss) before tax 17'669 (46'599) 9'648 (11'544) 

Income tax benefit/(expense) (20) (5'251) 11'448 (7'172) 3'555 

Net income/(loss) 12'418 (35'151) 2'476 (7'989) 

Basic earnings per share (in Swiss francs) (25) (23.43) 1.65 (4.23) 

Diluted earnings per share (in Swiss francs) (25) (23.43) 1.58 (4.23) 





CONSOLIDATED STATEMENTS OF CASH FLOWS 

For the periods from April 1, 1998, through October 2, 1998, and October 3, 1998 through March 31, 1999, 

and for the years ended March 31, 2000 and March 31, 2001 

(in thousands unless otherwise specified) 





Note 1998 1999 2000 2001 


Cash Flows from Operating Activities: 

Operating profit/(loss) 17'710 (21'360) 36'635 56'567 

Net interest expense paid (2'835) (9'155) (17'712) (19'546) 

Taxes paid (1'618) (3'646) (4'367) (5'508) 

Depreciation and amortization 9'331 14'499 33'952 41'945 

Other non-cash items (175) (182) 279 (947) 

Changes in assets and liabilities: 

Trade accounts receivable 20'106 (23'502) (2'542) (15'864) 

Inventories (1'807) 42'725 3'191 (15'467) 

Prepayments and accrued income (634) (1'153) 837 (3'237) 

Other assets 16 3'969 (766) (2'877) 

Trade accounts payable (16'202) 15'924 3'778 1'621 

Advance payments (6'950) (3'212) (7'564) (5'185) 

Accruals and deferred income 1'902 6'785 5'713 1'757 

Pension obligations (482) (218) (3'807) (5'086) 

Other liabilities (3'900) (1'708) 4'823 241 

Cash provided by operating activities 14'462 19'766 52'450 28'414 

Cash Flows from Investing Activities: 

Purchase of property, plant and equipment (6) (6'906) (11'918) (16'078) (21'890) 

Cash expended on intangible assets (8) (12'186) (10'970) (14'818) (18'751) 

Dividends from associated companies (9) 2'544 571 1'634 23 

Cash expended on acquisition (16) - (314'000) (1'756) (65'432) 

Other 888 2'324 573 7'641 

Cash used in investing activities (15'660) (333'993) (30'445) (98'409) 

Cash Flows from Financing Activities: 

Loans and borrowings 1'057 185'374 (20'377) 29'833 

Debt issuance, equity transaction and IPO costs - (27'900) (11'199) (27'557) 

Issue / (Redemption) of 9 7/8% Notes - - 157'585 (59'536) 

Repayment of Senior Subordinated Loan Facility - - (147'022) - 

Repayment of Vendor note - - - (70'421) 

Proceeds from issue of share capital - 150'000 - 197'674 

Other 5'330 - - - 

Cash provided by/(used in) financing activities 6'387 307'474 (21'013) 69'993 

Effect of exchange rate changes on cash and cash equivalents (2'394) 2'846 (165) 7 

Net increase/(decrease) in cash and cash equivalents 2'795 (3'907) 827 5 

Cash and cash equivalents at beginning of specified period 3'432 6'227 2'320 3'147 

Cash and cash equivalents at end of specified period 6'227 2'320 3'147 3'152 




CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 

For the periods from April 1, 1998, through October 2, 1998, and October 3, 1998 

through March 31, 1999, and for the years ended March 31, 2000 and March 31, 2001 



Leica Number Cumulative 

Beheer of regist. currency 

BV net shares Share Share Accumul translation 

investment issued Capital Premium Reserves deficit adjustment Total 

CHF Units CHF CHF CHF CHF CHF CHF 

Balance at March 31, 1998 

(Predecessor) 107'409 - - - - - - 107'409 

Net Income 12'418 - - - - - - 12'418 

Currency translation adjustment (4'885) - - - - - - (4'885) 

Intercompany transactions: 

Funds provided by related parties 25'657 - - - - - - 25'657 

Distributions to related parties (18'998) - - - - - - (18'998) 

Dividends to minority shareholders (30) - - - - - - (30) 

Balance at October 2, 1998 

(Predecessor) 121'571 - - - - - - 121'571 

Issuance of common stock - 7'500'000 75'000 75'000 - - - 150'000 

Net loss - - - - - (35'151) - (35'151) 

Currency translation adjustment - - - - - - 4'361 4'361 

Balance at March 31, 1999 

(Successor) - 7'500'000 75'000 75'000 - (35'151) 4'361 119'210 

Net income - - - - - 2'476 - 2'476 


Reclassifications - - - (75'000) 74'099 901 - - 

Balance at March 31, 2000 

(Successor) - 7'500'000 75'000 - 74'099 (31'774) 12'444 129'769 

Reverse share split 1'500'000 

Issuance of common stock - 662'457 33'122 220'594 - - - 253'716 

Equity transaction exp, net of tax - - - (11'185) - - - (11'185) 

Treasury shares movement - (282) (14) (92) - - - (106) 

Capital transaction with owners - - - - - (3'504) - (3'504) 

Net loss - - - - - (7'989) - (7'989) 


Balance at March 31, 2001 

(Successor) - 2'162'175 108'108 209'317 74'099 (43'267) 15'417 363'674 





NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 

For the years ended March 31, 1999, 2000, and 2001 

(in thousands unless otherwise stated) 

1. BUSINESS DESCRIPTION 

Leica Geosystems Holdings AG (”Leica Geosystems” or the ”Company”) and its consolidated 

subsidiaries (together the “Group”) are primarily engaged in the development, manufacture and 

distribution of surveying, positioning and guidance systems, construction laser technology-based 

products, handheld laser measuring systems, industrial measurement systems, laser scanning 

systems and other special products. The Company maintains its primary manufacturing facilities in 

Switzerland, Singapore and the United States with distribution and sales throughout the world. 

Prior to October 2, 1998, the Company’s business was conducted by the Geosystems division of 

Lancet Investment B.V., (the ”Leica Group”) formerly Leica Holdings B.V. 

On October 2, 1998, Leica Geosystems Holdings AG, a company owned by Investcorp S.A. ("Investcorp"), 

its clients and management purchased the various companies that conducted their business 

from Leica Beheer B.V. (the "Vendor"). The purchase of the shares of the Leica Geosystems Group 

(the “Acquisition”) was recorded under the purchase accounting method. 

As a result, the Group incurred substantial indebtedness under the revolving credit facility (the 

"Revolving Credit Facility"), the 9 7/8% Notes due 2008 and a promissory note given to the Vendor 

(the "Vendor Note"). 

On July 12, 2000, the Company completed its initial public offering (IPO) and the shares (listed as 

LGSN) began trading publicly on the SWX Swiss Exchange. 

Following the initial public offering in July 2000, the Group redeemed a portion of the 9 7/8% Notes 

outstanding and paid off the Vendor Note in full, reducing the indebtedness. 

The subsidiaries of Leica Geosystems are shown in Note 28. 

2. BASIS OF PRESENTATION 

Due to the purchase of the Leica Geosystems Group at the direction of Investcorp and management, 

the Company’s consolidated financial statements for periods prior to or on October 2, 1998, are not 

comparable to the consolidated financial statements presented subsequent to October 2, 1998. A 

'black line presentation' has been used on the accompanying consolidated financial statements to 

distinguish between the predecessor and successor periods. The predecessor period represents the 

period prior to the Acquisition and the successor periods represent the periods subsequent to the 

Acquisition. 

The financial statements for the predecessor period have been prepared as if the Company had 

existed as an independent entity. The financial statements include allocations of certain expenses 

relating to Leica Geosystems and formerly the Leica Group’s business that have been allocated to the 

Company and its predecessor from the respective parent. Management believes these allocations 

are reasonable. The predecessor financial information included herein may not necessarily reflect the 

consolidated financial position, results of operations, and cash flows of the Group as if the Group had 

been a separate entity during the predecessor period presented. 

The term ”CHF” in these consolidated financial statements refers to Swiss francs. Amounts are 

expressed in thousands unless otherwise stated. 

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

The consolidated financial statements are prepared in accordance with and comply with International 

Accounting Standards (IAS). The consolidated financial statements are prepared under the historic 

cost convention. The Company has adopted all of the standards of IAS which are mandatory as of 

March 31, 2001. 

The preparation of financial statements in accordance with IAS requires management to make 

estimates and assumptions that affect the amounts reported in the financial statements and related 

notes. Actual results may differ from those estimates.





Principles of Consolidation 

The consolidated financial statements include Leica Geosystems Holdings AG, a corporation 

registered in Switzerland, and its majority-owned subsidiaries held either directly or indirectly. 

All subsidiary undertakings over which the Company has the power to exercise control have been 

consolidated. Subsidiaries are consolidated from the date on which effective control is transferred 

to the Company and are no longer consolidated from the date of disposal. All significant intercompany 

transactions and balances are eliminated. Any intercompany profits or losses included in a 

subsidiary company’s income statement, which were not realized at the balance sheet date, are 

eliminated. The Company’s investments in companies in which it has the ability to exercise significant 

influence over operating and financial policies, normally those of which the Company owns between 

20% and 50%, are accounted for using the equity method. Investments in other companies are 

carried at cost less provision for permanent impairment. 

Foreign Currency Translation and Transactions 

The reporting currency for the Company’s financial statements is the Swiss franc (CHF). The functional 

currencies for the Company’s operations are the local currencies of each of its subsidiary companies. 

On consolidation, assets and liabilities of non-Swiss companies are translated into CHF at the 

year-end exchange rates. The statements of income are translated at the average rates of exchange 

for the period. Exchange differences arising on consolidation are shown under “Cumulative foreign 

currency translation adjustment”, which is a separate component of Shareholders’ Equity. Foreign 

exchange differences arising from the re-translation of borrowings denominated in foreign currencies 

are reported in the Income Statement under “Finance costs”. 

Foreign currency transactions are accounted for at the exchange rates prevailing at the date of the 

transaction. Gains and losses resulting from the settlement of foreign currency transactions and from 

the translation of monetary assets and liabilities which are denominated in foreign currencies are 

recognized in the Income Statement within the operating section (except those arising on foreign 

currency borrowings, referred to above, which are reported under the “Finance costs” section). 

Foreign currency balances are translated at period-end exchange rates, unless they are hedged by 

specific forward exchange contracts, in which case the rates established in those forward contracts 

are used. Exchange gains and losses relating to hedge transactions are recognized in the Income 

Statement in the same period as the exchange differences on the items covered by the hedge transactions. 

If option contracts are taken out, the option costs are amortized over the life of those contracts. 

Exchange gains and losses and hedging costs arising under hedges of anticipated future 

revenue or expense transactions are deferred until the date of such transactions, at which time they 

are included in the determination of such revenue and expenses. 

Financial Instruments 

As a result of conducting business in various foreign currencies, the Company is subject to transaction 

exposures that arise from foreign exchange movements between the date that the foreign currency 

transaction is recorded and the date it is consummated. 

As stated in the previous section, the Company has historically entered into forward foreign 

exchange contracts that are intended to fix the exchange rate on certain anticipated revenues and 

expenses. Such contracts have maturity periods of up to one year. The contracts are taken out in 

order to limit the Company’s exposure. These foreign exchange contracts are recorded using hedge 

accounting. The gains or losses arising thereon are accounted for at the time that the hedged 

transactions are consummated and not at the date of inception of the contracts. The unrealized gain 

or loss arising is disclosed in the notes to the financial statements. 

Interest rate swaps have been entered into in the past in order to protect the Group from adverse 

movements in interest rates. Any differential to be paid or received on an interest rate swap is recognized 

as a component of finance costs normally over the period of the swap agreement. Gains and 

losses on the termination of such contracts are taken to the Income Statement. 

Cash and Cash Equivalents 

Cash and cash equivalents include cash and interest-bearing deposits with an original maturity of 

three months or less. 


Leica Geosystems | 49






Trade Accounts Receivable 

Trade accounts receivable are presented net of appropriate provisions for doubtful accounts. 

Bad debts are written off in the year in which they are identified. 

Inventories 

Inventories are valued at the lower of cost or net realizable value based upon the average cost 

method. In the case of finished goods, work in progress and sub-assemblies, costs include an 

appropriate portion of manufacturing overhead, but exclude any interest expense. Sub-assemblies 

are included in the line “Raw materials and sub-assemblies” in Note 5 to the accounts. Net realizable 

value is the estimate of the selling price in the ordinary course of business, less the costs of completion 

and selling expenses. 

Property, Plant and Equipment 

Property, plant and equipment are stated at historical cost less accumulated depreciation. Depreciation 

expense is calculated using the straight-line method based on the following estimated useful 

lives: 

Land Not depreciated 

Buildings 50 years 

Machinery and equipment 4-15 years 

Computer and software 2-5 years 

Furniture and fixtures 5-10 years 

Motor vehicles and trucks 3-10 years 

Special tools and jigs 3 years 

Other 3-10 years 

The carrying values of assets with longer lives are reviewed whenever events or changes in 

circumstances indicate that they may not be recoverable. If such an event occurs, the Company 

prepares an analysis to determine whether an impairment exists. 

Repairs and maintenance costs are expensed as incurred. Interest expense is not capitalized, but 

expensed in the period to which it relates. 

Gains and losses on the sale of property, plant and equipment are recorded at the difference between 

their carrying value and the proceeds of sale. 

Accounting for Leases 

Leases of assets under which all the risks and benefits of ownership are effectively retained by the 

lessor are classified as operating leases. Payments made under operating leases are charged to the 

Income Statement on a straight-line basis as incurred over the period of the lease. When an operating 

lease is terminated before the lease period has expired, any payment required to be made to the lessor 

by way of penalty is recognized as an expense in the period in which the termination took place. 

Intangible Assets 

Intangible assets include goodwill and capitalized product and SAP R/3 development costs. Intangible 

assets are amortized over their estimated useful life. Internally generated costs related to dealer network, 

customer lists, trademarks and trade names are expensed as incurred and, if acquired in a 

business combination, form part of the amount attributed to goodwill at the date of the acquisition. 

All intangible assets are subject to adjustment in the event of impairment. 

Research and Development Costs 

Research costs are expensed in the Income Statement. Development costs of hardware and software 

products are capitalized in accordance with the criteria established under IAS 38, from the point at 

which their technical feasibility, profitability and payback are established up to the date of product 

release to the market. Capitalized development costs are amortized on a straight-line basis over the 

lifetime of the products concerned, which generally is three years but in no case more than five years 

from the product release date. Cost of materials, services, salaries, and overheads that can be allocated 

on a reasonable and consistent basis are capitalized. Marketing costs are excluded from capitalization. 

Costs which have been expensed in prior periods are not capitalized in later periods.





Amortization of product development costs is included in the “Research and development costs” in 

the Income Statement. 

Goodwill 

Goodwill represents the excess of the price paid for an acquisition over the fair value of the net 

assets acquired. Goodwill is amortized on a straight-line basis over its estimated useful life, not 

above 20 years. Amortization charge is included in “Other operating expense”. The value of goodwill is 

reviewed annually and adjusted whenever permanent impairment is determined. 

Provisions 

Provisions are recognized when the Group has a present legal or constructive obligation as a result of 

past events and it is 

probable that an outflow of resources will occur and the amount can be reasonably estimated. 

Future warranty costs are accrued, based on historical experience, when goods are supplied or services 

rendered. Actual warranty costs incurred are charged against the accrual when paid. 

Any costs relating to the restructuring of the Group are charged to the Income Statement in the year 

in which they are incurred. Employee termination liabilities are only recognized if there is an agreement 

in place specifying the terms. 

Pension and Other Retirement Benefit Obligations 

Leica Geosystems provides retirement benefits to its employees in line with local customs and requirements. 

Contributions are, where appropriate, based on periodic actuarial calculations and are charged 

against the Income Statement over the periods benefiting from the employees' service. Pension 

schemes are generally funded through payments to insurance companies or other independently 

administered funds. In respect of defined benefit plans, according to the definition of IAS 19 (revised), 

pension costs are calculated using the projected unit credit method. Under this method the costs of 

providing pensions is charged to the Income Statement in order to spread the regular costs over the 

service lives of employees in accordance with the advice of qualified actuaries. The pension obligation 

is the actuarially computed present value of the estimated future net cash outflow using interest 

rate assumptions in line with long term government securities. All actuarial gains and losses exceeding 

the 10% corridor are spread forward over the average remaining service lives of employees. The 

Group’s contributions to the defined contribution plans are charged to the Income Statement in the 

year to which they relate. 

In the case of on-going early retirement plans, actuarial calculations are performed to determine the 

necessary provision based on reasonable assumptions regarding the percentage of staff who are 

expected to take advantage of the plan. The provision results in the cost of the early retirement plan 

being recognized over the service periods of the related employees. Prior service costs arising on 

inception of the plans are amortized over the remaining service period of the related employees. 

Equity compensation benefits 

Share options are granted to directors and to employees. If the options are granted at the market 

price of the shares on the date of the grant and are exercisable at that price, no compensation cost is 

recognised. If the options are granted at a discount on the market price, a compensation cost is 

recognised in the Income Statement based on that discount. When the options are exercised, the 

proceeds received net of any transaction costs are credited to share capital (nominal value) and share 

premium. 

Taxation 

Deferred tax assets and liabilities are recognized for the future tax consequences of differences 

between the financial statement carrying amounts of existing assets and liabilities and their 

respective tax bases, and for operating loss and tax credit carry forwards. Deferred tax assets and 

liabilities are measured using enacted tax rates in the respective jurisdictions in which the Company 

operates. In assessing the probability of realization of deferred tax assets, management considers 

whether it is probable that profits will be generated against which the deferred tax assets will be 

realized. 








Generally, deferred taxes are not provided on the unremitted earnings of subsidiaries because it is 

expected that these earnings will be permanently reinvested and such determination is not practicable. 

Such earnings may become taxable upon the sale or liquidation of these subsidiaries or upon the 

remittance of dividends. 

Shareholders' Equity 

For the predecessor period the Company was a division of the Leica Group. Accordingly, shareholders' 

equity was presented as a single figure representing invested equity. Invested equity included 

historical investments and advances from Leica Beheer B.V., third party liabilities paid on behalf of 

the Company, as well as current period income, and foreign currency translation adjustments. 

External costs directly attributable to the issue of new shares, other than on a business combination, 

are shown as a deduction, net of tax, in equity from the proceeds. Share issue costs incurred directly 

in connection with a business combination are included in the cost of acquisition. 

Where the Company or its subsidiaries purchases the Company’s equity share capital, the consideration 

paid including any attributable transaction costs net of income taxes is deducted from total 

shareholders’ equity as treasury shares until they are cancelled. Where such shares are subsequently 

sold or re-issued, any consideration received is included in shareholders’ equity. 

Concentration of Credit Risk 

Assets and financial instruments which could potentially subject the Company to credit risk are trade 

accounts receivable and foreign exchange contracts. Concentration of credit risk with respect to trade 

accounts receivable is limited due to the large number of customers comprising the Company’s 

customer base and their breakdown among many different industries and geographical locations. 

The Company is exposed to credit risk with respect to foreign exchange contracts in the event of 

nonperformance by the counter-parties to these financial instruments, which are however major 

financial institutions. 

Revenue Recognition 

Revenue is recognized when significant risks and rewards of ownership of goods have been transferred 

to a third party. This would normally occur following delivery of the products or services and 

acceptance by the customers. Revenues from service contracts paid by customers in advance are 

recognized over the period of the contract in accordance with the terms specified therein. 

Advance payments received from customers are deferred, and recorded as income when the related 

product has been delivered or services performed. The advance payments or deposits are primarily 

related to contracts with the defense department of the Swiss government.





4. TRADE ACCOUNTS RECEIVABLE 

Accounts receivable consisted of the following: 

March 31, 

1999 2000 2001 

CHF CHF CHF 

Gross trade receivables 113'983 120'479 146'911 

Allowance for doubtful accounts (4'781) (5'543) (4'283) 

Net trade receivables 109'202 114'936 142'628 

Receivables from associated companies 1'085 2'606 1'527 

Total accounts receivables 110'287 117'542 144'155 

5. INVENTORIES 

Inventories consisted of the following: 

March 31, 


CHF CHF CHF 

Raw materials and sub-assemblies 43'909 43'524 57'649 

Work-in-progress 23'535 14'793 19'153 

Finished goods 44'038 49'385 69'504 

Demonstration inventories 18'145 22'691 24'785 

Gross inventories 129'627 130'393 171'091 

Allowances (24'701) (24'738) (30'329) 

Total inventories 104'926 105'655 140'762 

The gross values represent the purchase or production costs of inventories at the balance sheet date. 

The allowances are for excess quantities, slow-moving and obsolete items. 








6. PROPERTY, PLANT AND EQUIPMENT 

Land, Buildings, Machinery 

Fixtures and and Other 

Fittings Installations Equipment Total 


GROSS VALUES 

Value at March 31, 1999 120'342 131'115 47'890 299'347 

Additions 1'843 6'758 7'477 16'078 

Disposals (16) (2'551) (4'195) (6'762) 

Reclassifications 1'633 (1'267) (366) - 

Exchange rate adjustments 712 2'537 1'404 4'653 

Value at March 31, 2000 124'514 136'592 52'210 313'316 

Acquisition of subsidiaries - 5'519 1'279 6'798 

Additions 1'621 10'267 10'002 21'890 

Disposals (8'883) (8'818) (6'745) (24'446) 

Exchange rate adjustments (164) 62 (456) (558) 

Value at March 31, 2001 117'088 143'622 56'290 317'000 

Land, Buildings, Machinery 

Fixtures and and Other 

Fittings Installations Equipment Total 


ACCUMULATED DEPRECIATION 

Value at March 31, 1999 (40'652) (93'125) (33'901) (167'678) 

Depreciation expense (4'833) (9'086) (6'749) (20'668) 

Disposals 5 1'961 3'945 5'911 

Reclassifications (1'092) 1'175 (83) - 

Exchange rate adjustments (286) (1'924) (921) (3'131) 

Value at March 31, 2000 (46'858) (100'999) (37'709) (185'566) 

Depreciation expense (2'763) (11'364) (7'864) (21'991) 

Disposals 4'346 7'658 5'748 17'752 

Exchange rate adjustments 113 256 347 716 

Value at March 31, 2001 (45'162) (104'449) (39'478) (189'089) 

NET BOOK VALUES AT 

March 31, 1999 79'690 37'990 13'989 131'669 

March 31, 2000 77'656 35'593 14'501 127'750 

March 31, 2001 71'926 39'173 16'812 127'911 

1999 

March 31 


CHF CHF CHF 

Fire insurance value of property, plant and equipment 

Buildings 149'976 144'380 130'832 

Machinery equipment and other fixed assets 179'306 180'939 192'790 

Total insurance value of property, plant and equipment 329'282 325'319 323'622





7. GOODWIL 

Total 

Goodwill 

CHF 

GROSS VALUES 

Value at March 31, 1999 142'291 

Value at March 31, 2000 142'291 

Acquisition of subsidiaries 115'677 

Exchange rate adjustments 2'398 

Value at March 31, 2001 260'366 

ACCUMULATED AMORTIZATION 

Value at March 31, 1999 (3'558) 

Amortization charge (7'115) 

Value at March 31, 2000 (10'673) 

Amortization charge (8'484) 

Value at March 31, 2001 (19'157) 


March 31, 1999 138'733 

March 31, 2000 131'618 

March 31, 2001 241'209 

Leica Geosystems Holdings AG was incorporated in Switzerland on July 30, 1998, as the holding 

company for the Geosystems businesses which it acquired from Leica Beheer B.V. on October 2, 

1998. The purchase method of accounting was adopted for the Acquisition. The results of operations 

of the acquired companies are included in the consolidated statements of income of the Company 

from October 3, 1998. Goodwill, representing the excess purchase price over the fair value of net 

assets acquired, arising upon the Acquisition was CHF 142'291, which is being amortized over 20 

years at the rate of CHF 7'115 per annum. 

Goodwill arising upon the acquisition of Cyra Technologies Inc. and Laser Alignment Inc. totaling USD 

68'327 (CHF 115'677). This amount is being amortized over a period of ten years. 

8. OTHER INTANGIBLE ASSETS 

Product SAP 

Development Development 

Costs Costs Total 

CHF CHF CHF 

GROSS VALUES 

Value at March 31, 1999 19'805 7'370 27'175 

Additions 14'228 590 14'818 

Exchange rate adjustments 390 - 390 

Value at March 31, 2000 34'423 7'960 42'383 

Acquisition of subsidiaries 15'085 - 15'085 

Additions 18'751 - 18'751 

Exchange rate adjustments 549 - 549 

Value at March 31, 2001 68'808 7'960 76'768 

ACCUMULATED AMORTIZATION 

Value at March 31, 1999 (153) (1'922) (2'075) 

Amortization charge (4'636) (1'533) (6'169) 

Value at March 31, 2000 (4'789) (3'455) (8'244) 

Amortization charge (9'878) (1'592) (11'470) 

Exchange rate adjustments (18) - (18) 

Value at March 31, 2001 (14'685) (5'047) (19'732) 


March 31, 1999 19'652 5'448 25'100 

March 31, 2000 29'634 4'505 34'139 

March 31, 2001 54'123 2'913 57'036 








9. INVESTMENTS IN ASSOCIATES 

Investments in associated companies accounted for using the equity method comprised 

of the following: 

March 31, 


CHF CHF CHF 

LH Systems LLC, USA 1'987 3'874 7'137 

ADC Systems GmbH, Germany 310 - - 

AED Graphics AG, Germany - - 2'251 

NovaLIS Technologies Ltd, Canada 116 - 1'070 

Total investments in associates 2'413 3'874 10'458 

LH Systems Cyra AED Graphics NovaLIS Total 

CHF CHF CHF CHF CHF 

Investment at March 31, 2000 3'874 - - - 3'874 

Acquisitions - 14'892 2'340 1'098 18'330 

Income statement 3'072 (3'954) (89) (28) (999) 

Dividends received (23) - - - (23) 

Foreign exchange impact 214 - - - 214 

Reclassification to other assets - (10'938) - - (10'938) 

Total 7'137 - 2'251 1'070 10'458 

Note: 

Amortization expenses included - (947) (41) (28) (1'016) 

Net Goodwill included - (*) 1'580 1'070 2'650 

(*) Cyra goodwill was reclassified to intangible assets at February 21, 2001 (Note 16) 

LH Systems - For LH-Systems see also Note 26, “Post balance sheet events”. 

Cyra – On April 1, 2000 Leica Geosystems acquired 20.9% of the share capital of Cyra Technologies 

Inc. This investment was accounted for under the equity method from April 1, 2000 until February 21, 

2001 at which time the remaining 79.1% was acquired. From February 21, 2001 Cyra Technologies Inc. 

is fully consolidated. See also Note 16, “Acquisitions”. 

AED Graphics - In January 2001, the Company acquired a 25% stake in AED Graphics AG ("AED 

Graphics"), a German company specializing in software development for the cadastral and GIS 

market. AED Graphics is certified to install digital cadastral mapping solutions in government offices 

in Germany. With a high market penetration in Germany, one of Europe's most important markets, 

AED Graphics is strongly positioned to take a leading role in the transition of cadastre to comprehensive 

public information systems, such as those required by government departments holding large 

data sets of interest to the public. 

NovaLIS - In January 2001, Leica Geosystems increased its interest (from 25% to 38%) in NovaLIS 

Technologies Ltd. ("NovaLIS"), a Canadian company involved in land records management and 

integrated governmental workflow for data gateways in the Internet. The collection, management, 

analysis and dissemination of information in these areas has become an important function for local 

governments, particularly in North America.





10. TRADE ACCOUNTS PAYABLE 

Accounts payable consisted of the following: 

March 31, 


CHF CHF CHF 

Trade payables 44'999 50'092 63'855 

Payables due to associated companies - 211 125 

Total accounts payable 44'999 50'303 63'980 

11. OTHER CURRENT LIABILITIES 

Other current liabilities consisted of the following: 

March 31, 


CHF CHF CHF 

Forward contract losses 609 1'234 392 

Accrued interest 2'557 5'134 3'077 

Other current payables 5'383 8'878 10'002 

Total other current liabilities 8'549 15'246 13'471 

Other current payables included primarily value-added tax and payroll-related liabilities. 

12. LOANS AND BORROWINGS 

Loans and borrowings consisted of the following: 

1999 

March 31, 


CHF CHF CHF 

Current: 

Senior Subordinated Loan 146'912 - - 

Less unamortized debt acquisition cost (4'700) - - 

Net Senior Subordinated Loan 142'212 - - 

Other short-term loans 912 1'826 1'198 

Total current 143'124 1'826 1'198 

Non-current: 

Revolving Credit Facility 59'729 41'838 96'654 

Less unamortized debt acquisition cost (6'325) (5'341) (4'959) 

Net Revolving Credit Facility 53'404 36'497 91'695 

9 7/8% Notes - 159'010 99'185 

Less unamortized bond issuance cost - (5'479) (3'062) 

Net 9 7/8% Notes - 153'531 96'123 

Vendor Note 66'471 69'503 - 

Less unamortized discount (35'796) (34'843) - 

Net Vendor Note 30'675 34'660 - 

Total non-current 84'079 224'688 187'818 

Total loans and borrowings 227'203 226'514 189'016 








Revolving Credit Facility 

At March 31, 2001, the Company had a CHF 175’000 Revolving Multicurrency Credit Facility (the 

”Facility”) arranged by Chase Manhattan plc through several financial institutions which expires in 

full in July, 2003. The balance outstanding at March 31, 2000, was CHF 41’838 and at March 31, 2001, 

CHF 96’654. The Facility bears an interest rate equalling LIBOR plus additional costs and a margin of 

0.875%. The weighted average interest rate on the outstanding borrowings was 6.3% for the fiscal 

year ended March 31, 2001 (2000: 6.07%). At March 31, 2001, after taking account of amounts used 

for foreign exchange, guarantee and letter of credit facilities, the Company had CHF 62’072 available 

under the Facility (2000: CHF 79’426). 

The debt acquisition cost of the Facility was CHF 8’417 (including an addition of CHF 1'517 in fiscal 

year 2001) and is being amortized over the 3 year term of the Facility. The unamortized portion of the 

debt acquisition cost of CHF 4’959 at March 31, 2001 (2000: CHF 5’341), is stated in the Company’s 

balance sheet as a reduction of the Facility gross debt amount. Subsequent to the IPO the debt acquisition 

amortisation period was reduced from 7 to 3 years. 

Senior Subordinated Loan Facility replaced by 9 7/8% Notes 

At March 31, 1999, the Company had a Senior Subordinated Loan Facility arranged by Merrill Lynch 

Capital Corporation of DEM 180’000 (equivalent to CHF 146’912 at March 31, 1999). In June 1999, the 

Senior Subordinated Loan Facility was extinguished and the Company issued in its place a note (“9 

7/8% Notes”) of EURO 100’000, maturing on December 15, 2008, at an interest rate of 9 7/8%. The 9 

7/8% Notes were issued by Finance plc pursuant to an indenture, with Bankers Trust Company, as trustee, 

dated June 18, 1999 (the “Indenture”). In connection with the initial public offering, we redeemed 

on August 31, 2000, 35% of the 9 7/8% Notes then outstanding at a redemption price of 

109.875%, plus accrued interest through the date of the redemption, as permitted under the Indenture. 

At March 31, 2001, the remaining 9 7/8% Notes outstanding were EURO 65'000, equivalent to CHF 

99'185. The 9 7/8% Notes were issued under par at 98’645, so that the 9 7/8% Notes imputed interest 

rate is 10.0176%. At March 31, 2001, the 9 7/8% Notes were trading at a premium. The 9 7/8% Notes 

are subordinate to the Revolving Credit Facility. 

The cost of the debt acquisition of the Senior Subordinated Loan Facility of CHF 9’400 was amortized 

to “Finance costs” in the Income Statement up to the date of the discharge of this facility in June 1999. 

The cost of the debt issuance of the 9 7/8% Notes of CHF 5’948 is being amortized to “Finance costs” 

in the Income Statement over the nine and a half year term of the 9 7/8% Notes. Subsequent to the 

redemption of the 9 7/8% Notes the Company recorded a finance cost impairment of CHF 1'795. 

The unamortized portion of the 9 7/8% Notes issuance cost of CHF 3'062 at March 31, 2001 (2000: CHF 

5'479), is stated in the Company’s balance sheet as a reduction of the 9 7/8% Notes gross debt amount. 

Vendor Note 

The Company had a CHF 65’000 subordinated note (the ”Vendor Note”) with Leica Beheer B.V., the 

prior owner. The Vendor Note was repaid at face value plus accrued interest in connection with the 

initial public offering. There is no balance outstanding at March 31, 2001. The unamortized discount 

as at the date of repayment impacted the Income Statement as a non-recurring cost of CHF 34’541. 

13. FINANCIAL INSTRUMENTS 

Foreign Exchange Contracts 

March 31, 


CHF CHF CHF 

Contract values 113'622 158'461 88'288 

Positive market value 709 1'584 717 

Negative market value 1'682 6'146 1'635 

The contract value shows the volume (gross nominal value) of the hedging transactions open at the 

balance sheet date. The negative market value is the potential cost required to close the outstanding 

contracts at the balance sheet date. The positive market value represents the unrealized profit on hedging 

transactions on the balance sheet date and thus the maximum risk in the event that the other 

party to the contract should not fulfil its obligations. Hedging is undertaken exclusively through first 

class financial institutions.





At March 31, 2001, the aggregate loss on outstanding foreign exchange contracts, when compared 

with the market rates on that date, amount to CHF 918 (2000: CHF 4'562), of which CHF 392 (2000: 

CHF 1'234) is included in the Income Statement, being in respect of balance sheet items, and CHF 526 

(2000: CHF 3'328) is in respect of anticipated transactions. 

In addition to the above mentioned contracts the Company purchased two foreign currency 

options in the year ended March 31, 2001. These contracts had a contract value of CHF 5’051 (2000: 

CHF 5’142) and a positive market value of CHF 26 (2000: CHF 32) at March 31, 2001. 

Interest Rate Cap 

The Company has entered into an arrangement (interest rate cap) whereby interest payable is limited 

to 8% on borrowings totaling CHF 50’000. The interest rate cap, which expires in November 2001, is 

currently designated as a protection for interest expense on the Revolving Credit Facility. The premium 

paid for this instrument has been fully written off and its fair value at March 31, 2001, is estimated 

to be insignificant. 

14. PROVISIONS 

Warranty Other Total 

Provisions Provisions Provisions 

CHF CHF CHF 

Value as of March 31, 2000 5'060 2'178 7'238 

Acquisition of subsidiaries 985 300 1'285 

Additional provision recorded 4'958 504 5'462 

Unused amounts reversed (231) (13) (244) 

Utilized during the year (4'390) (1'596) (5'986) 

Exchange rate adjustments 79 64 143 

Value as of March 31, 2001 6'461 1'437 7'898 

Of the above provisions some CHF 1’212 are considered to be long-term (above one year) and the 

remainder short-term. 

15. COMMITMENTS AND CONTINGENCIES 

Operating Leases 

The Company leases certain of its facilities and equipment under operating leases. The future minimum 

lease payments under operating leases at March 31, 2001 are as follows: 

CHF 

2002 8'726 

2003 5'948 

2004 3'954 

2005 2'794 

2006 2'039 

Thereafter 2'792 

Total 26'253 

Litigation 

From time to time the Company is involved in legal actions and claims arising in the ordinary course 

of business. While the ultimate result of these claims cannot presently be determined, management 

does not expect that these matters will have a material adverse effect on the financial position, 

results of operations or cash flows of the Company. 

Guarantees 

The Company has entered into agreements for various performance bonds, customer guarantees and 

letters of credit amounting to CHF 25'079, CHF 17’236 and CHF 11’450 at March 31, 1999, 2000, and 

2001, respectively. The most significant guarantee relates to a customer guarantee made in relation to 

advances received from the government of Switzerland. This guarantee was entered into in December 

1996 for a period to last until 2001 for the delivery of certain of the Company’s goods. 








Bills of Trade Discounted with Recourse 

Bills of trade discounted with recourse under the normal course of business in Japan, France, 

Portugal and Hongkong amounted to CHF 3’375 at March 31, 1999, CHF 4’709 at March 31, 2000, and 

CHF 4’573 at March 31, 2001. 

Capital Expenditure Commitments 

The Company has entered into commitments (purchase orders) in respect of items of capital equipment 

totaling CHF 1’337 at March 31, 1999, CHF 2’423 at March 31, 2000, and CHF 3’462 at March 31, 

2001. 

Pledged Assets 

Before the IPO, substantially all of the Company’s assets were pledged under the terms of the Company’s 

Revolving Multicurrency Credit Facility Agreement of October 2, 1998, with Chase Manhattan 

PLC, which acted as the Facility Agent for a syndicate of financial institutions. Subsequent to the IPO 

dated July 12, 2000, no assets were pledged under the Revolving Credit Facility. 

16. ACQUISITIONS 

On January 8, 2001 the Company acquired 100% of the share capital of Laser Alignment Inc. in one 

cash transaction. The legal entity, based in Grand Rapids, Michigan (USA), specializes in high-precision 

3D guidance and automated machine control systems for the use on construction-sites, in 

mining applications, and in the agricultural market. 

Laser Alignment is reported within the business segment “Terrestrial Positioning Systems”. The acquired 

business contributed revenues of CHF 10‘650 and an operating loss of CHF 1‘381 to the Company 

for the period from January 8, 2001 to March 31, 2001. 

On April 1, 2000 Leica Geosystems acquired 20.9% of the share capital of Cyra Technologies Inc. This 

investment was accounted for under the equity method from April 1, 2000 until February 21, 2001 at 

which time the remaining 79.1% was acquired. From February 21, 2001 Cyra Technologies Inc. is fully 

consolidated. The legal entity , based in Oakland, California (USA), specializes in development and 

production of 3D laser scanning and data modeling systems. 

Cyra is reported under the new business segment “New Businesses”. The acquired business contributed 

revenues of CHF 7'014 and an operating loss of CHF 816 to the Company for the period from 

February 22, 2001 to March 31, 2001.





Following is a summary of the key elements of all acquisitions: 

Note 2001 

CHF 

Cash paid 68'089 

Fair value of shares issued 55'712 

Aggregate purchase price 123'801 

Acquisition expenses 2'304 

Total purchase consideration 126'105 

Fair value of net assets / liabilities acquired (6'473) 

Accumulated losses from April 1 to February 21, 2001 (Equity method) (3'008) 

Gross goodwill 116'624 

Accumulated goodwill amortization until February 21, 2001 (947) 

Net goodwill as of acquisition date (7) 115'677 

Cash and cash equivalents (6'643) 

Receivables (12'751) 

Inventories (19'272) 

Property, plant and equipment, net (6) (6'798) 

Other intangible assets (8) (15'085) 

Loans and borrowings 25'396 

Payables 11'944 

Accrued liabilities and deferred income 16'736 

Fair value of net (asset) / liabilities acquired (6'473) 

Total purchase consideration 126'105 

Less fair value of shares issued (55'712) 

Less cash and cash equivalents in subsidiaries acquired (6'643) 

Less prepaid amounts in prior year (1'756) 

Cash outflow on acquisitions of fully consolidated subsidiaries 61'994 

Investments in associates (9) 3'438 

Cash outflow on acquisitions 65'432 

Pursuant to the achievement of various milestones a further payment (in maximum USD 35.0 million) 

may be applicable for the purchase of Cyra Technologies Inc. (see Note 17). 





17. SHAREHOLDERS’ EQUITY 




Cumulative 

Number of Share Share prem. Accumulated currency 

shares issued capital / Reserves deficit transl.adj. Total 

units CHF CHF CHF CHF CHF 

Opening position at March 31, 2000 7'500'000 75'000 74'099 (31'774) 12'444 129'769 

Reverse share split (5:1) 1'500'000 - - - - - 

Issuance of common stock 662'457 33'122 220'594 - - 253'716 

Issuance of contingency shares 102'470 5'124 - - - 5'124 

Elimination of contingency shares (102'470) (5'124) - - - (5'124) 

Equity transaction expenses, net of tax - - (11'185) - - (11'185) 

Treasury shares movement (282) (14) (92) - - (106) 

Capital transaction with owners - - - (3'504) - (3'504) 

Net loss - - - (7'989) - (7'989) 

Currency translation adjustment - - - - 2'973 2'973 

Balance at March 31, 2001 2'162'175 108'108 283'416 (43'267) 15'417 363'674 

On July 10, 2000, an Extraordinary General Meeting of the Company resolved to consolidate the par 

value of the shares by converting every 5 existing shares with a par value of CHF 10 (single Swiss 

Francs) each into 1 share with a par value of CHF 50 (single Swiss Francs). The Extraordinary General 

Meeting further resolved to increase the Company’s capital to CHF 101'250 through the issuance of 

525’000 shares at a par value of CHF 50 (single Swiss Francs) each. 

On July 12, 2000, Leica Geosystems Holdings AG completed its initial public offering within Switzerland, 

an offering to institutional investors elsewhere outside the United States, and an offering in the 

United States to qualified institutional buyers. 

On February 19, 2001 the Board resolved to increase the Company’s share capital under the authorised 

share capital by CHF 11'049 by issuing 220’983 fully-paid up registered shares with a par value 

of CHF 50 (single Swiss Francs) each. Upon the increase of the share capital the Company purchased 

all shares of Cyra Technologies, Inc., Oakland, California, USA, so far as they were not yet held by 

Leica Geosystems AG, a subsidiary of the Company. 118'513 new shares were subscribed and fully 

paid up in connection with the merger agreement and transferred to the entitled former shareholders 

of Cyra Technologies. Also 59’534 new shares were sub-scribed and fully-paid up by Credit Suisse, 

St. Gallen, as Trustee in order to hedge the Company's potential obligations under the earn-out; such 

shares have been subscribed for and are being held by Credit Suisse who committed to only act in 

accordance with instructions given by the Board either to transfer the shares to the eligible Cyra Technologies 

shareholders for the purpose of the earn-out or, in case the earn-out milestones would not 

or just partially be achieved, to tender the remaining shares to the Company with the purpose of a 

capital decrease. A further 42’936 new shares were also subscribed and fully-paid up by Credit 

Suisse, St. Gallen, as Trustee in order to hedge the Company's potential obligations with respect to 

assumption of Cyra Technologies' options and warrants; such shares have been subscribed for and 

are being held by Credit Suisse who committed to transfer such shares to the eligible holder of 

options or warrants against payment of the exercise price exclusively in accordance with instructions 

given by the Board of the Company. The voting rights of the 102'470 shares will not be exercised and 

no dividend will be paid as long as these shares are held by the trustee. 

The authorized and conditional capital as well as the significant shareholders are described in the 

Notes to the Statutory Financial Statements on page 84 and 85. 

On March 31, 2001 the Company holds 282 shares in treasury. 

Since the listing of the Leica Geosystems Holdings AG shares on the SWX Swiss Exchange, the 

shares have traded as follows:


NOTES TO THE CONSOLIDATED CONSOLIDATED FINANCIAL STATEMENTS 

For For the years ended March 31, 1999, 2000, and 2001 


stated) 

Average daily trading 

High Low volume 

CHF CHF (in thousands of shares) 

July 2000 532 430 71.38 

August 2000 583 489 8.11 

September 2000 566 490 6.63 

October 2000 560 480 4.08 

November 2000 558 500 4.86 

December 2000 555 487 3.34 

January 2001 538 481 3.60 

February 2001 539 432 7.16 

March 2001 488 398 4.07 

18. SEGMENT INFORMATION 

The basis of reporting the segment information as disclosed below is consistent with that used internally 

for evaluating segment performance and allocating resources to segments. The Company differentiates 

between Core Segments, New Businesses and Special Products. The first are identified by customer 

application or product line (Surveying, Positioning and Guidance Systems, Handheld Laser Measurement 

Systems, Industrial Measurement Systems), the second is being created as a platform for the launch of 

our laser scanning and three-dimensional visualization business and the third by customer application, 

product line or activity (Defense Products, Manufacturing, Aerial Visionics and Photogrammetry Systems 

‘AVS/PGS’ and Central Services). 

The core market segments include 1) measuring and positioning equipment for the surveying industry 

(”Surveying, Positioning and Guidance Systems”), 2) Handheld Laser Measuring Systems, including the 

HLMS module, for the construction and home improvement trades and 3) high precision measurement 

systems used in the industrial measurement industry (”Industrial Measurement Systems” or ”IMS”). The 

Company also manufactures products that utilize similar technologies as those employed in its core market 

segments (”Special Products”). 

Business segments include: 

• Surveying, Positioning and Guidance Systems 

- TPS — Primarily provides three-dimensional measurement and positioning products for the surveying 

and construction industry. 

- GPS — Primarily provides satellite-based surveying and marine navigation global positioning systems 

and instruments. 

• Handheld Laser Measurement Systems - Primarily the HLMS module product line, used for quick, easy 

and accurate measurements of areas and volumes needed in industrial and domestic improvement 

applications. 

• IMS — Primarily provides measurement systems for industrial applications. 

• New Businesses – Laser scanning and three-dimensional visualization and modeling of spatial 

information. 

• Special Products 

- Defense Products — Supplies the defense business with other Company products which have been 

specifically adapted for military applications. 

- AVS/PGS — Provides products supporting the mapping industry. 

- Manufacturing — Principally manufacturer components and products for the other business 

segments. However, it does have direct third party sales to outside customers. 








Business Segments 





1998 1999 2000 2001 

Sales to external customers: 

Surveying, Positioning & Guidance Systems: 


Terrestrial Positioning Systems 99'086 98'923 238'012 273'978 

Global Positioning Systems 30'871 35'451 97'268 120'905 

Total Surveying, Positioning & Guidance Systems 129'957 134'374 335'280 394'883 

Handheld Laser Measuring Systems 19'367 16'733 43'600 58'251 

Industrial Measurement Systems 26'044 32'378 56'986 62'451 

Total Core Businesses 175'368 183'485 435'866 515'585 

New Businesses 

Special Products: 

- - - 7'014 

Defense Products 30'725 30'830 63'456 68'056 

Manufacturing 13'063 13'582 27'445 42'114 

Other (1) 7'995 15'155 12'965 9'656 

Total Special Products 51'783 59'567 103'866 119'826 

Total sales to external customers 227'151 243'052 539'732 642'425 

1) Includes AVS/PGS, most of which has been transferred to the LH Systems joint venture in FY 2000. 






Results by segment: CHF CHF CHF CHF 


Terrestrial Positioning Systems 12'683 9'452 26'939 34'426 

Global Positioning Systems 332 2'741 7'131 11'260 

Total Surveying, Positioning & Guidance Systems 13'015 12'193 34'070 45'686 

Handheld Laser Measuring Systems 3'128 2'713 7'445 7'678 

Industrial Measurement Systems 5'613 7'812 6'286 8'796 

Total Core Businesses 21'756 22'718 47'801 62'160 



- - - (816) 

Defense Products 3'000 2'123 5'758 9'099 

Manufacturing 2'712 2'995 4'414 8'632 

Other (1) (3’353) 1'093 (965) 655 

Total Special Products 2'359 6'211 9'207 18'386 

Total Segment Results 24'115 28'929 57'008 79'730 

Central Services (6'405) (50'289) (20'373) (23'163) 

Total operating profit/(loss) 17'710 (21'360) 36'635 56'567 

(1) Includes AVS/PGS, most of which has been transferred to the LH Systems joint venture in FY 2000. 

Central Services includes goodwill amortization (not allocated to segments) of CHF 7’115 for the year ended March 31, 2001, 

CHF 7’115 for the year ended March 31, 2000, and CHF 3’558 for the period October 3, 1998, to March 31, 1999. For the period 

October 3, 1998, to March 31, 1999, Central Services also includes an expense of CHF 41’800 which relates to the increase in the 

book value of inventories to fair value as at the effective date of the Acquisition.





March 31, 


Assets by segment: CHF CHF CHF 


Terrestrial Positioning Systems 129'569 145'702 212'619 

Global Positioning Systems 43'770 53'636 59'639 

Total Surveying, Positioning & Guidance Systems 173'339 199'338 272'258 

Handheld Laser Measuring Systems 20'989 27'496 34'434 

Industrial Measurement Systems 36'364 36'267 37'631 

Total Core Businesses 230'692 263'101 344'323 



- - 121'744 

Defense Products 27'895 29'224 27'651 

Manufacturing 62'319 59'693 66'713 

Other (1) 15'518 2'755 3'252 

Total Special Products 105'732 91'672 97'616 

Central Services 53'006 52'587 56'844 

Total assets by segment 389'430 407'360 620'527 

Reconciliation of Segment Assets to Consolidated Balance Sheets: 

1999 

March 31, 


Assets CHF CHF CHF 

Total segment assets 

Financing assets: 

389'430 407'360 620'527 

Goodwill (not allocated to segments) 138'733 131'618 124'502 

Deferred tax 8'254 12'260 13'933 

Total consolidated assets 536'417 551'238 758'962 


March 31, 


Business segment current liabilities: CHF CHF CHF 










- - 6'216 

Defense Products 14'698 16'951 14'244 


Other (1) 5'627 2'092 1'132 



Total business segment current liabilities 119'889 137'476 154'589 

Reconciliation of Segment Current Liabilities to Consolidated Balance Sheets: 

March 31, 


Current liabilities CHF CHF CHF 

Total segment current liabilities 119'889 137'476 154'589 

Short-term debt 145'875 2'003 1'513 

Total consolidated current liabilities 265'764 139'479 156'102 









March 31, 


Capital expenditure by segment: CHF CHF CHF 










- - 212 

Defense Products 391 515 516 


Other (1) 554 45 67 



Total, excluding goodwill 41'980 30'896 40'644 

Goodwill, not allocated by segment 142'291 - - 

Goodwill, assign ED to Terrestrial Positioning Systems - - 25'344 

Goodwill, assigned to New Businesses - - 90'333 

Total including goodwill 184'271 30'896 156'321 


The above table includes capital expenditure on plant, property and equipment, on product and SAP 

R/3 development costs, and on goodwill. Goodwill from fully consolidated acquisitions is assigned to 

the respective segments. 






Depreciation and amortization by segment: CHF CHF CHF CHF 

Surveying, Positioning & Guidance Systems 

Terrestrial Positioning Systems (1'766) (2'627) (7'813) (10'452) 

Global Positioning Systems (664) (1'006) (4'018) (5'248) 

Total Surveying, Positioning & Guidance Systems (2'430) (3'633) (11'831) (15'700) 

Handheld Laser Measuring Systems (150) (167) (619 (2'721) 

Industrial Measurement Systems (448) (485) (1'454) (2'245) 

Total Core Businesses (3'028) (4'285) (13'904) (20'666) 



- - - (1'295) 

Defense Products (438) (510) (804) (735) 

Manufacturing (1'834) (1'972) (3'583) (3'811) 

Other (1) - (173) (145) (31) 

Total Special Products (2'272) (2'655) (4'532) (4'577) 

Central Services (4'031) (7'559) (15'516) (15'407) 

Total depreciation and amortization by segment (9'331) (14'499) (33'952) (41'945) 

(1) Includes AVS/PGS, most of which has been transferred to the LH Systems joint venture in FY 2000.









April 1, 1998 October 3, 1998 

Year ended Year ended Year ended Year ended 



Sales by geographic segment: CHF CHF CHF CHF 

Switzerland 31'657 40'766 69'222 85'157 

Rest of Europe 102'173 101'138 239'933 258'895 

United States 45'145 43'292 97'897 131'034 

Rest of Americas 10'210 11'520 25'190 35'084 

Asia Pacific 32'663 37'717 94'191 96'878 

Other 5'303 8'619 13'299 35'377 

Total sales by geographic segment 227'151 243'052 539'732 642'425 

March 31, 


Assets by geographic segment: CHF CHF CHF 

Switzerland 235'150 220'473 232'359 

Rest of Europe 69'668 76'126 93'197 

United States 43'969 61'503 238'662 

Rest of Americas 7'939 9'316 11'179 

Asia Pacific 32'704 39'942 45'130 

Total assets by geographic segments 389'430 407'360 620'527 

Reconciliation of Segment Assets to Consolidated Balance Sheets: 

1999 

March 31, 


Assets: CHF CHF CHF 

Total segment assets 

Financing assets: 

389'430 407'360 620'527 

Goodwill (not allocated to segments) 138'733 131'618 124'502 

Deferred tax 8'254 12'260 13'933 

Total assets consolidated 536'417 551'238 758'962 

March 31, 


Capital expenditure by geographic segment: CHF CHF CHF 

Switzerland 34'050 25'912 31'622 

Rest of Europe 1'479 1'169 1'538 

United States 3'567 1'924 4'148 

Rest of Americas 37 187 191 

Asia Pacific 2'847 1'704 3'145 

Total capital expenditure, excluding goodwill 41'980 30'896 40'644 

Goodwill, Switzerland 142'291 - - 

Goodwill, United States - - 115'677 

Total capital expenditure, including goodwill 184'271 30'896 156'321 

The above table includes capital expenditure on plant, property and equipment, on product 

and SAP R/3 development costs, and on goodwill.






19. FINANCE COSTS 







Interest income: 

Third party 121 30 242 676 

Total interest income 121 30 242 676 

Interest expense: 

Revolving Credit Facility - (1'545) (4'570) (6'673) 

Senior Subordinated Loan Facility - (7'399) (3'211) - 

9 7/8% Notes - - (12'409) (12'017) 

Vendor Note - (1'491) (3'032) (918) 

Amortization of discount on Vendor Note - (304) (953) (302) 

Leica companies of former parent (1'808) - - - 

Other (1'043) (461) (45) (10) 

Total interest expense (2'851) (11'200) (24'220) (19'920) 

Debt acquisition, issuance and share offering costs: 

Amortization of debt acquisition cost – Revolving 

Credit Facility - (575) (984) (1'899) 

Amortization of debt acquisition cost – Senior 

Subordinated Loan Facility - (4'700) (4'700) - 

Amortization of potential debt offering costs - (11'600) - - 

Amortization of debt issuance cost – 9 7/8% Notes - - (469) (490) 

Impairment of debt issuance costs - - - (1'795) 

Write-off of capitalized discount on Vendor Note - - - (34'541) 

Premium on 35% repayment of 9 7/8% Notes - - - (5'351) 

Fees related to the 35% repayment of 9 7/8% Notes - - - (2'093) 

Fees related to share offering - - - (7'746) 

Total debt acquisition, issuance and share offering costs - (16'875) (6'153) (53'915) 

Foreign exchange gains on borrowings 4 2'252 74 6'047 

Total finance costs (2'726) (25'793) (30'057) (67'112) 

20. TAXES ON INCOME 







Current taxes: 

Domestic (1'531) (2'124 (7'463) 1'289 

Foreign (1'411) (1'997) (2'182) (2'579) 

Deferred taxes: 

(2'942) (4'121) (9'645) (1'290) 

Domestic (2'309) 12'143 (712) (2'051) 

Foreign - 3'426 3'185 6'896 

(2'309) 15'569 2'473 4'845 

Total income tax benefit/(expense) (5'251) 11'448 (7'172) 3'555


Applying the maximum tax rate of 25% (in prior years 25% and 27% respectively) at the Company’s 

headquarter location (Leica Geosystems AG, Heerbrugg, Switzerland) to the loss before income tax 

of CHF 11’544, an expected tax benefit of CHF 2’886 results. 








Maximum tax rate for Heerbrugg, Switzerland 27% 27% 25% 25% 


Income tax benefit/(expense), at maximum rate (4'771) 12'582 (2'412) 2'886 

Effect of taxes at rates other than maximum rate (93) (48) 469 (1'748) 

Non-tax deductible expenses (incl goodwill amortization) (89) (1'476) (1'729) (3'865) 

Taxes saved by use of fully provided tax losses 633 (186) 578 3'739 

Change in valuation allowances on deferred tax assets (931) (1'192) (4'821) (646) 

Effect of changes in tax rate and legislation - - 1'.985 254 

Tax related to other periods - - (1'555) 495 

Other - 1'768 313 2'440 

Income tax benefit/(expense) (5'251) 11'448 (7'172) 3'555 

Taxes directly recorded in equity amounted to CHF 1'746 in FY 2001. 

Deferred tax assets and liabilities arise due to differences between Group and tax valuations in the 

following balance sheet items: 

March 31, 


Assets Liabilities Assets Liabilities Assets Liabilities 

CHF CHF CHF CHF CHF CHF 

Losses carried forward 9'875 - 11'389 - 15'377 - 

Intangible assets 3'852 6'258 2'071 7'747 2'748 9'346 

Property, plant and equipment 1'226 27'181 622 25'467 618 15'897 

Inventories 5'127 5'737 6'906 4'910 9'497 5'250 

Provisions and pension obligations 3'613 27 3'818 23 4'108 46 

Other items 2'114 1'486 1'766 656 2'126 1'567 

Total 25'807 40'689 26'572 38'803 34'474 32'106 

Valuation allowance (6'470) - (6'136) - (14'372) - 

Offset of assets and liabilities (11'083) (11'083) (8'176) (8'176) (6'169) (6'169) 

Total deferred taxes 8'254 29'606 12'260 30'627 13'933 25'937 

At March 31, 2001, the Company had tax losses carried forward totaling CHF 46'642 (2000: CHF 35'600, 

1999: CHF 31’510) with a tax value of CHF 15'377 (2000: CHF 11'389, 1999: CHF 9’875). 

Of these, CHF 1’829 expire by March 2004 and further CHF 8'606 by March 2008. The remaining 

CHF 36'207 may be utilized after March 2008. A valuation allowance against certain of these 

tax loss carry forwards has been recorded. 

21. STATEMENT OF INCOME 

The statement of income has been prepared using the activity-based income statement presentation 

method. The costs of sales, selling, general and administrative expenses include the following costs: 







Staff costs 94'487 100'966 219'455 257'126 

Depreciation and amortization 9'331 14'499 33'952 41'945






22. PENSION OBLIGATIONS 

The most important defined benefit pension plans of Leica Geosystems are offered to its employees 

in Switzerland and the United States of America. 

On March 1, 1999, the Company amended its early retirement plan to allow Swiss employees to elect 

early retirement at their option. Under the previous plan, early retirement was available only at the 

Company’s election, and had historically been offered in connection with significant non-recurring 

reductions in head count. This plan is not funded and a provision has therefore been recorded based 

on an actuarial assessment of the plan. Past service benefits arising on inception of the plan on 

March 1, 1999, are amortized over the remaining service period of the related employees. 

The principal assumptions applied to prepare actuarial valuations of the defined benefit plans are as 

follows: 

March 31, 


Assumptions (weighted average): % % % 

Discount rate 3.55 3.56 4.04 

Investment return 4.85 5.08 5.02 

Salary inflation 2.05 2.06 2.03 

Pension increases 1.01 1.02 0.96 

The components of the benefit obligation are as follows: 

1999 

March 31, 


CHF CHF CHF 

Change in benefit obligation: 

Pension Benefit Obligation (PBO) at beginning of the year 464'951 474'458 441'654 

Service cost 18'699 19'057 16'963 

Interest cost 16'225 16'815 17'867 

Amendments and settlements 4'273 (7'877) 719 

Actuarial (gain)/loss 7'893 (25'580) 29'127 

Benefits paid (37'158) (35'729) (38'700) 

Translation differences (425) 510 69 

Pension Benefit Obligation at end of year 474'458 441'654 467'699 

1999 

March 31, 


CHF CHF CHF 

Change in plan assets: 

Fair value of plan assets at beginning of year 435'219 452'019 454'295 

Actual return on plan assets 39'970 29'063 9'085 

Employer contribution 8'215 11'417 12'084 

Plan participants' contribution 6'410 6'337 6'506 

Amendments and settlements - (9'091) 381 

Benefits paid (37'158) (35'729) (38'700) 

Translation differences (637) 279 75 

Fair value of plan assets at end of year 452'019 454'295 443'726





1999 

March 31, 


CHF CHF CHF 

Funded status: 

Funded status at year end (22'439) 12'641 (23'973) 

Unrecognized net actuarial (gain)/loss (7'503) (38'942) 3'751 

Unrecognized prior service cost 5'240 4'800 4'360 

Accrued benefit cost (24'702) (21'501) (15'862) 

1999 

March 31, 


CHF CHF CHF 

Amounts recognized in the balance sheet: 

Prepaid benefit cost 1'119 - - 

Accrued benefit liability (25'821) (21'501) (15'862) 

Accrued benefit cost (24'702) (21'501) (15'862) 

1999 

March 31, 


CHF CHF CHF 

Reconciliation to the consolidated balance sheet: 

Defined benefit pension plans (accrual) (24'702) (21'501) (15'862) 

Other post retirement benefits (1'865) (1'474) (1'984) 

Pension obligations (26'567) (22'975) (17'846) 

1999 

March 31, 


CHF CHF CHF 

Benefit cost: 

Service cost 18'699 19'057 16'963 

Interest cost 16'225 16'815 17'867 

Expected return on plan assets (21'051) (22'827) (22'855) 

Amortization of prior service cost 45 440 440 

Amortization of transition obligation - - 267 

Recognized actuarial (gain)/loss 3'587 (376) (4) 

Plan participants’ contributions (6'410) (6'337) (6'506) 

Loss on plan settlement - 1'272 - 

Net periodic pension benefit cost 11'095 8'044 6'172 

In addition to the above plans, the Company sponsors defined contribution plans in 

various countries. 

23. STOCK OPTION PLANS 

Options outstanding 

Outstanding Thereof 

Original Converted Exercised Lapsed or options at vested at 

Exercise numbers numbers numbers in cancelled in March 31, March 31, 

price granted granted FY01 FY01 2001 2001 

81 36'601 - (13) 36'588 17'253 

100 490'576 98'115 (17'120) - 80'995 80'995 

120 97'300 19'460 (1'930) - 17'530 14'980 

375 40'640 - (649) 39'991 - 

429 6'334 - (131) 6'203 65 

Total 201'150 (19'050) (793) 181'307 113'293 








In connection with the Leica Geosystems Group Acquisition, the Company adopted an employee 

equity incentive plan providing for the purchase by directors, executives and other employees of 

LGSN shares and for the grant of options to purchase shares. The plan is administered by the remuneration 

and nomination committee of our Board of Directors. All options automatically vested upon 

completion of our initial public offering. Certain of the options granted in March 2000 did not vest 

automatically upon completion of our initial public offering, but will instead vest in December 2001. 

Subject to certain limitations, all vested options may be exercised at any time prior to October 2005. 

Shares acquired by employees under the 1998 plan will be newly issued by us out of conditional 

capital. The numbers in the above table have been adjusted to reflect the 5:1 reverse stock split 

implemented prior to our initial public offering. 

In June 2000, the Company adopted a new employee equity incentive plan (the "2000 Employee 

Plan"). The 2000 Employee Plan is administered by the remuneration and nomination committee of 

our Board of Directors. Except as otherwise determined by the remuneration and nomination 

committee, under the 2000 Employee Plan, it is intended to grant, over the next two years, options to 

directors and employees to purchase approximately 6% of the outstanding shares. Each grant will 

vest in equal annual tranches over a four-year term, will remain in effect for seven years from the 

date of grant until they lapse and will have an exercise price at or near the market price of the shares 

on the date the option is granted. On July 11, 2000, pursuant to the 2000 Employee Plan, the 

Company granted options to directors and employees to purchase up to 40’640 shares, following 

completion of our initial public offering, with an exercise price equal to CHF 375, the offer price of our 

initial public offering. The 2000 Employee Plan includes customary provisions in respect of accelerated 

vesting and lapsing of options upon termination of employment, retirement, death and disability. 

Shares acquired by employees under the 2000 Employee Plan will either be newly issued by the 

Company under the conditional capital or purchased in open market transactions. 

Upon completion of the recent acquisition of Cyra Technologies, the Company assumed Cyra 

Technologies' previous stock option plan. Outstanding options to acquire Cyra Technologies shares 

were automatically converted in options to acquire up to an aggregate of 42’935 of LGSN shares, 

at exercise prices ranging from CHF 81 to CHF 429 per share. Options in respect of approximately 

17’318 shares are currently vested, with the balance vesting in tranches over the next 5 years. 

In order to hedge potential obligations upon exercise of these former Cyra Technologies options, 

42’935 new shares have been subscribed for by Credit Suisse in a fiduciary capacity. 

24. RELATED PARTY TRANSACTIONS 

Associated companies 

Since October 1, 1997, the Leica Geosystems Group has been operating as a separate legal group 

from the Microsystems Group. 

On October 2, 1998, Leica Geosystems was acquired by Investcorp. The Company received 

certain consulting services from Investcorp. The consolidated financial statements for the year ended 

March 31, 2000, included expense of CHF 172 (1999: CHF 150) relating to such services. 

No equivalent amount was expensed in fiscal year 2001. 

As reported in Note 17 the Company absorbed capital transaction costs on behalf of the owners 

(Investcorp), related to the IPO (July 2000) amounting to CHF 3'504. 

During the year ended March 31, 2001, the Company effected certain transactions at arms-length 

with its non-consolidated associated company LH Systems LLC, as follows: Sales of products and 

services of CHF 3'381 (2000: CHF 11'301) as well as purchases of products and services of CHF 6'897 

(2000: CHF 4'559). 

Executive Officer and Director Compensation 

Four members of the Board of Directors of the Company received a directors fee of CHF 350 (in total) 

per annum plus any costs and expenses incurred in connection with their serving as members of the 

Board. In addition certain members of the Board have been granted 4’381 options. By March 31, 

2001, 2’892 Board member options at a exercise price of CHF 100 had vested. Certain restrictions 

apply to the Board members’ rights to sell their shares or exercise or sell their options. 

For fiscal year 2001, executive officers and directors compensation aggregated CHF 2'891 in salaries 

and bonus payments, comprised of CHF 2'154 and CHF 737 respectively, and aggregated CHF 136 in 

pension contributions. 

At March 31, 2001 the executive officers and directors owned 28'199 options of which 24'521 are 

vested. An additional 20’505 options are held as reserve for management and Board members.





25. EARNINGS PER SHARE 

Basic earnings per share is calculated by dividing the net profit available for shareholders by the 

weighted average number of ordinary shares outstanding and issued during the year, excluding the 

number of shares purchased by the Company and held as treasury shares. 



October 3, 1998 Year ended Year ended 

to March 31, March 31, March 31, 


CHF CHF CHF 

Net income/(loss) attributable to shareholders (35'151) 2'476 (7'989) 

Weighted average number of ord shares in issue (in thousands) (*) 1'500 1'500 1'887 

Basic earnings per share (single Swiss francs per individual share) (23.43) 1.65 (4.23) 

(*) Restated by reverse share split (5:1) 

For the share options, a calculation is done to determine the number of shares that could have been 

acquired at market price. The calculation serves to calculate the extent of the dilutive effect. No 

adjustments are made to net profit for this options calculation. 

Net income/(loss) attributable to shareholders 

Weighted average number of ord shares in issue (in thousands) (*) 

Adjustment for share options (in thousands) 

Weighted average number of ordinary shares for diluted earnings 

per share (in thousands) 

Diluted earnings per share 

(*) Restated by reverse share split (5:1) 

For the diluted earnings per share the weighted average number of ordinary shares in issue is adjusted 

to assume conversion of all potentially dilutive ordinary shares (see Note 23). The Company has 

share options granted to management and employees which qualify as potentially dilutive ordinary 

shares. 

Leica Geosystems Holdings AG paid no dividends in Fiscal 1999, 2000 or 2001. 

For the period 

October 3, 1998 Year ended Year ended 

to March 31, March 31, March 31, 


CHF CHF CHF 

(35'151) 2'476 (7'989) 

1'500 1'500 1'887 

- 74 - 

1'500 1'574 1'887 

(23.43) 1.58 (4.23)






26. POST BALANCE SHEET EVENTS 

In connection with the expansion into remote sensing and GIS mapping, Leica Geosystems recently 

entered into agreements to make two acquisitions. These acquisitions will enable the Company not 

only to offer what it believes is the most comprehensive world-wide program of surveying technology 

sensors from terrestrial platforms (including TPS tachometers, GPS and three-dimensional laser 

scanning), but also to become a global leader in acquiring remote sensing data from satellites and 

aerial photographs from airplanes. 

Following the closing of these acquisitions, ERDAS and LH Systems will form the core of our GIS and 

mapping business division. The following is an overview of each of these companies. 

ERDAS, Inc. 

On May 11, 2001, the Company acquired 100% of the outstanding shares of ERDAS Inc. for total purchase 

price consideration of USD 48.1 million or CHF 84.6 million. USD 30.0 million (CHF 52.9 million) 

were purchased by cash, the remaining USD 18.1 million (CHF 31.7 million) purchase comprised of 

62'762 shares. We are financing the cash of the purchase price entirely with borrowings under the 

Revolving Credit Facility. 

Based in Atlanta, Georgia, ERDAS is a pioneer and leader in remote sensing software. ERDAS offers 

a suite of software used to produce image-based maps for a variety of customers and applications. 

ERDAS's software is based on modern technologies and is used on ESRI’s ArcInfo V8 platform, the 

same platform that Leica Geosystems currently uses for its GIS and surveying products. 

LH Systems LLC 

On April 27, 2001, the Company entered into an agreement to purchase the 50% interest in LH Systems 

that it does not already own from BAE Systems, the joint venture partner, for approximately 

USD 15 million in cash. The acquisition of BAE Systems' membership interest is being financed 

entirely with borrowings under the Revolving Credit Facility. Closing is expected in June 2001. 

Based in San Diego, California, LH Systems is a pioneer and leader in aerial photography and 

sensing, as well as in photogrammetry. LH Systems offers a product line of aerial cameras and has 

recently introduced the first digital airborne sensor. LH Systems has, over the past ten years, 

migrated from a distributor of analog/analytical photogrammetric equipment (manufactured by Leica 

Geosystems) to a distributor of digital photogrammetric software (developed by BAE Systems).





27. DIFFERENCES BETWEEN IAS AND U.S. GENERALLY ACCEPTED ACCOUNTING PRINCIPLES 

The accompanying consolidated financial statements have been prepared in accordance with IAS, 

which, as applied by the Company, differ in certain significant respects from generally accepted 

accounting principles in the United States (“U.S. GAAP”). Such differences involve methods for 

measuring the amounts shown in the financial statements, as well as the disclosures contained 

within the financial statements. The effects of the application of U.S. GAAP to net income/(loss) and 

shareholders’ equity are set out in the tables below: 




Notes 1998 1999 2000 2001 


Net Income/(Loss) under IAS 12’418 (35’151) 2’476 (7’989) 

U.S. GAAP adjustments: 

Research and development in process (i) — (31’200) — (219) 

Amortization of goodwill (i) — 2’836 5’672 6’038 

Amortization of other intangible assets (i) (14) (2’844) (5’688) (7’218) 

Forward exchange contracts (ii) — 515 (3’272) 2’802 

Capitalization of software development costs (iii) 62 (32) (2’485) (2’491) 

Amortization of software development costs (iii) (1’837) (1’827) (2’879) (1’167) 

Capitalization of hardware development costs (iv) (9’321) (8’011) (9’967) (10’300) 

Amortization of hardware development costs (iv) — 143 4’014 8’668 

Stock-based compensation (v) — — (267) (8’124) 

Equity transaction expenses (vi) — — — 7’096 

Other items (56) — — — 

Deferred tax effect on U.S. GAAP adjustments 2’792 3’014 6’771 2’726 

Net income/(loss) reported under U.S. GAAP 4’044 (72’557) (5’625) (10’178) 

Basic loss per share under U.S. GAAP (48.37) (3.75) (5.39) 

Diluted loss per share under U.S. GAAP (48.37) (3.75) (5.39) 

Shares used in computing basic and diluted loss 

per share under U.S. GAAP 1’500 1’500 1’887 

March 31, 

Notes 2000 2001 

CHF CHF 

Shareholders' equity under IAS 129’769 363’674 

U.S. GAAP adjustments: 

Acquisition accounting (i) (8’362) (9’761) 

Forward exchange contracts (ii) (3’328) (526) 

Software development costs (iii) (1’910) (5’568) 

Hardware development costs (iv) (23’755) (25’387) 

Stock-based compensation (v) (267) (7’367) 

Other items — — 

Deferred tax effect on U.S. GAAP adjustments (15’483) (11’361) 

Total U.S. GAAP adjustments (53’105) (59’970) 

Shareholders' equity reported under U.S. GAAP 76’664 303’704 

A summary of the principal differences and additional disclosures applicable to the Company are set 

out below: 

(i) Acquisition Accounting 

In accordance with IAS 22 (revised 1998), the difference between the purchase price and the aggregate 

fair value of tangible and intangible assets and liabilities acquired in a business combination is 

capitalized as goodwill and amortized over its useful life, not to exceed 20 years. Intangible assets 

are only recognized when the Company can rent, sell, exchange, or distribute the assets without 

disposing of the future economic benefits associated with those assets. 

U.S. GAAP requires the application of the purchase method of accounting to the Company's 

acquisition transactions, in which the cost of an investment is assigned to the tangible and identifiable 

intangible assets acquired and liabilities assumed on the basis of their fair values at the date of 

acquisition. Any excess of cost over fair value of net assets acquired is recorded as goodwill, which 

is then amortized over its expected useful economic life, not to exceed 40 years. Goodwill arising on 

acquisition of the Acquisition was CHF 28’853 under U.S. GAAP. 








The following represents the allocation of the purchase price to the net assets acquired 

in the Acquisition in accordance with U.S. GAAP: 

CHF 

Total purchase price: 

Operating business 298’700 

Acquisition costs 8’300 

307’000 

Less: Historical invested equity 109’794 

Excess of total purchase price over historical net assets 197’206 

Less: Fair value adjustments to the historical net assets 

Research and development - In processs 31’200 

License agreements 46’300 

Inventories 41’800 

Property, plant and equipment 40’700 

Patents 36’600 

Dealer network 15’000 

Other intangibles 7200 

Pension liabilities (4’730) 

Deferred taxes (45’717) 

Excess of total purchase price over fair value of historical adjusted net assets 28’853 

An additional amount of CHF 77’873 was recorded in conjunction with the Cyra acquisition during 

fiscal year 2001 under the purchase method of accounting in accordance with U.S. GAAP. The net fair 

values of assets acquired consisted of cash (CHF 6’226), trade accounts receivable (CHF 4’577), inventories 

(CHF 5’485), tangible fixed assets (CHF 1’887), other intangible assets (CHF 30’002), other 

assets (CHF 347), trade payables and accrued liabilities (CHF 8’452), stock option liability (CHF 6’820), 

long term financial debts (CHF 8’694) and other liabilities (CHF 3’177). In addition, the Company 

incurred accumulated losses of CHF 3’008 since April 1, 2000 until February 21, 2001. 

For the purpose of the reconciliation to U.S. GAAP, goodwill related to the Acquisition and the Cyra 

acquisition are generally being amortized through the consolidated statements of income on a 

straight-line basis over the estimated useful life of the corresponding acquisition, ranging from 

10 to 20 years. Identified intangible assets are amortized over their estimated useful lives ranging 

from 3 to 40 years. Acquired research and development in-process is immediately expensed under 

U.S. GAAP, which is not allowed under IAS. 

(ii) Forward Exchange Contracts 

The Company historically has entered into forward foreign exchange contracts that are intended to 

fix the exchange rate on certain anticipated intercompany sales and purchases. Such contracts have 

maturities of up to one year. No specific guidance for forward exchange contracts exists under IAS 

as it is currently applied by the Company. As such, the Company applies hedge accounting whereby 

gains and losses on forward exchange contracts are recognized only when the underlying transactions 

are settled. For U.S. GAAP purposes, under SFAS No. 80 ”Accounting for Futures Contracts”, 

these foreign exchange contracts do not qualify for hedge accounting. Accordingly, under U.S. GAAP, 

foreign currency forward contracts purchased by the Company are marked to market at the balance 

sheet date, with the resulting profit or loss recognized in the consolidated statements of income. 

(iii) Software Development Costs 

The Company applies IAS 38, “Intangible Assets” which requires capitalization of software development 

costs if the Company can demonstrate that the assets will generate probable future economic 

benefits. Costs to obtain new technology, and to search for, design or evaluate project alternatives 

are expensed as incurred. Costs to design, develop and test software are capitalized. Capitalized 

software costs are amortized on a straight-line basis, beginning when the products are available for 

use.





Under U.S. GAAP, the costs related to the conceptual formulation and design of software products 

and other costs incurred prior to establishment of the technological feasibility are expensed as 

product development costs. Costs incurred subsequent to establishment of the technological feasibility 

of software products are capitalized in accordance with SFAS No. 86, ”Accounting for the Costs of 

Computer Software to be Sold, Leased, or Otherwise Marketed”. Amortization of capitalized software 

costs, which begins when products are available for general release to customers, is calculated based 

on the ratio of current period revenues to expected total revenues over the life of the product or on a 

straight-line basis. 

Software development costs under U.S. GAAP consist of the following: 

CHF 

Net amount capitalized at March 31, 1998 7’088 

Gross amount capitalized 2’434 

Amortization expense (3’674) 

Net amount capitalized at March 31, 1998 5’848 



Net amount capitalized at March 31, 2000 4’092 



Net amount capitalized at March 31, 2001 7’171 

(iv) Hardware Development Costs 

The Company applies IAS 38, “Intangible Assets” which requires capitalization of hardware development 

costs if the Company can demonstrate that the assets will generate probable future economic 

benefits. Under U.S. GAAP, these costs must be expensed as incurred. 

(v) Stock-based Compensation 

The Company does not account for stock-based compensation, as it is not required under IAS. Under 

U.S. GAAP, the Company applies SFAS No. 123, ‘‘Accounting for Stock-Based Compensation’’ and 

related interpretations in accounting for its plans. As described in Note 23, the Company has two 

plans that are subject to measurement under SFAS No. 123, the 1998 Employee Incentive Equity Participation 

Plan and the 2000 Stock Option Plan, which includes options converted under the 1996 Cyra 

Stock Option Plan (the “Plans”). Compensation expense is computed based on the fair value of the 

options at the grant date and are recognized over the vesting period. CHF 1’421 of compensation 

expense was recorded for the new 2001 option grants under U.S. GAAP. 

In conjunction with the initial public offering on July 12, 2000, 105’125 options were accelerated and 

became immediately vested. As a result, CHF 5’679 was recorded as compensation expense under 

U.S. GAAP. 

In addition to the stock option plans mentioned above, the Company also entered into a stock 

purchase plan that allowed 

eligible employees to purchase stock at a 20% discount of the initial offering price. 13’649 shares 

were purchased by employees at a discounted price of CHF 300 per share. The market value for 

these shares were CHF 375 at the date of purchase and as a result, CHF 1’024 of compensation 

expense was incurred during fiscal year 2001 under U.S. GAAP. Under IAS, these costs, net of tax 

are deducted directly from shareholders’ equity. 

Fair values are estimated using the Black-Scholes option pricing model, based on the following 

assumptions: 


Dividend yield 0% 0% 0% 

Expected volatility 0% 0% 45.6% 

Risk-free interest rate 3% 3.8% 3.1% 

Expected life 5 Years 3 Years 4.5 Years 

The weighted-average fair values for stock options granted were CHF 13.75, CHF 272.70 and CHF 

197.40 during 1999, 2000, and 2001, respectively (stated in single Swiss Francs). 








The following table summarizes information concerning stock options outstanding under the Plans at March 31, 2001: 

Options Outstanding Options Exercisable 

Number Weighted Average Number 

Range of Outstanding at Remaining Weighted Exercisable at Weighted Average 

Exercise Prices March 31, 2001 Contractual Life Exercise Price March 31, 2001 Exercise Price 

CHF CHF 

81 36’588 7.92 81.00 17’253 81.00 

100-120 98’525 4.82 103.56 95’975 103.12 

375-429 46’194 6.77 382.25 65 429.00 

The following table summarizes the activity for the Plans (in single Swiss Francs): 

Number of Weighted 

Shares Average 

Exercise Price 

CHF 

Balance March 31, 1998 — — 

Granted 99’005 100.00 

Balance March 31, 1999 99’005 100.00 

Granted 19’460 120.00 

Cancelled (1’780) 100.00 

Balance March 31, 2000 116’685 103.35 

Granted 41’530 369.11 

Acquisitions 42’935 132.34 

Exercised (19’050) 102.03 

Cancelled (793) 379.10 

Balance March 31, 2001 181’307 170.01 

(vi) Equity transaction expenses 

Under U.S. GAAP, costs attributable to share issuances are recorded as a deduction from 

shareholders’ equity. Under IAS, SIC-17 prohibits costs that are directly related to an initial public 

offering being deducted from shareholders’ equity. Under IAS, such costs are recorded as expense 

in the Income Statement. 

(vii) Loss on early settlements of debt 

Under U.S. GAAP, gains (losses) recorded on early settlements of debt are recorded in the consolidated 

statements of income. The Company settled CHF 129’957 of debt early using the proceeds from 

its initial public offering. The Company results for fiscal year 2001 would have been reported differently 

as follows under U.S. GAAP: Income/(loss) before tax would have been higher than IAS by 

CHF 43’780 and an extraordinary loss of CHF 41’655, net of tax or CHF 22.07 per share would have 

been recorded in the consolidated statements of income. 

(viii) Other U.S. GAAP Disclosure Items 

Pension provisions: 

Under IAS, pension costs and similar obligations are accounted for in accordance with IAS 19 revised, 

‘‘Employee Benefits’’. Under U.S. GAAP, pension costs for defined benefit plans are accounted 

for in accordance with SFAS No. 87, ‘‘Employers’ Accounting for Pensions’’ and the disclosures are 

presented in accordance with SFAS No. 132, ‘‘Employers’ Disclosures about Pensions and Other 

Post-retirement Benefits’’. The assumptions used to prepare actuarial valuations for the plans are the 

same under IAS and U.S. GAAP. The projected benefit obligation and the fair value of plan assets are 

the same under IAS and U.S. GAAP for all periods presented. 

March 31, 


CHF CHF 

Funded status: 

Funded status at year end 12’641 (23’973) 

Unrecognized net actuarial (gain)/loss (38’942) 3’751 

Unrecognized prior service cost 4’800 4’360 

Accrued benefit cost (21’501) (15’862) 

Amounts recognized in the balance sheet: 

(Accrued) benefit liability (21’501) (15’862) 

Accrued benefit cost (21’501) (15’862)





1999 

March 31, 


CHF CHF CHF 

Benefit cost: 

Service cost 18’699 19’057 16’963 

Interest cost 16’225 16’815 17’867 

Expected return on plan assets (21’051) (22’827) (22’855) 

Amortization of prior service cost 45 440 440 

Recognized actuarial (gain)/loss 3’580 (376) (4) 

Amortization of transition obligation 3’053 — 267 

Plan participants’ contributions (6’410) (6’337) (6’506) 

Loss on plan settlement — 1’272 — 

Net periodic pension benefit cost 14’141 8’044 6’172 

Other comprehensive income: 

SFAS No. 130 “Reporting Comprehensive Income” established standards for the reporting and 

display of comprehensive income and its components. Comprehensive income includes net income 

on all changes in equity during a period that arise from non-owner sources, such as the effects of 

foreign currency translation. The additional disclosures required under U.S. GAAP are as follows: 

March 31, 


CHF CHF CHF 

Net income/(loss) under U.S. GAAP (72’557) (5’625) (10’178) 

Other comprehensive income: 

Foreign currency translation adjustment 4’361 8’083 2’973 

Comprehensive income/(loss) under U.S. GAAP (68’196) 2’458 (7’205) 

Income Taxes 

Under U.S. GAAP, future tax benefits resulting from the recognition of net operating losses existing 

at the acquisition date would have been reflected as a reduction of goodwill and other intangible 

assets. 

Recently issued accounting standards: 

International Accounting Standards 

IAS 39 “Financial Instruments: Recognition and Measurement” requires all financial assets and 

financial liabilities to be recognized on the balance sheet, including all derivatives. They are initially 

measured at cost, which is the fair value or whatever was paid or received to acquire the financial 

asset or liability. Subsequent to initial recognition, all financial assets should be measured at fair 

value except for certain specified exceptions. After acquisition most financial liabilities should be 

measured at original recorded amount less principal repayments and amortization. For those 

financial assets and liabilities that are remeasured to fair value, the Company can either recognize 

the adjustment in the income statement or in equity until the asset is sold. 

Upon adoption of the standard on April 1, 2001, the Company will record a one-time debit to retained 

earnings for the initial adoption of IAS 39 totalling approximately CHF 526 (before tax) related to net 

unrealized gains and losses on foreign exchange contracts. 

In connection with IAS 39, various revisions have been made to IAS 32 “Financial Instruments: 

Disclosure and Presentation” in order to make the authoritative literature and underlying accounting 

guidelines consistent. The revisions to IAS 32 become effective for periods beginning on or after 

July 1, 2001. The effect of these revisions will require additional disclosures in conjunction with the 

implementation of IAS 39 as described above. 

US GAAP 

Statement of Financial Accounting Standards 133, “Accounting for Derivative Financial Instruments” 

(SFAS 133), as amended by SFAS No. 137 and No. 138 requires all derivative instruments to be 

recorded on the balance sheet at their fair value. Changes in the fair value of derivatives are recorded 

each period in current earnings or other comprehensive income. 

Management has determined that the provisions of SFAS 133, as amended will not have a material 

effect on the Company. 








28. LIST OF COMPANIES INCLUDED IN THE LEICA GEOSYSTEMS CONSOLIDATED ACCOUNTS AT MARCH 31, 2001 

Company Registered seat Shares held 

Leica Geosystems Holdings AG Heerbrugg, Switzerland Holding 

Leica Geosystems Finance B.V. Rijswijk, The Netherlands 100% 

Leica Geosystems Finance plc. Milton Keynes, United Kingdom 100% 

Leica Geosystems AG Heerbrugg, Switzerland 100% 

Leica Geosystems Holdings, Inc. Atlanta, GA, USA 100% 

Leica Geosystems Holdings B.V. Rijswijk, The Netherlands 100% 

Leica Geosystems Inc. Atlanta, GA, USA 100% 

Leica Technologies Inc. Leesburg, VA, USA 100% 

Leica Geosystems Ltd. Milton Keynes, United Kingdom 100% 

Leica Geosystems SARL Le Pecq Cedex, France 100% 

Leica Geosystems GmbH Vertrieb Munich, Germany 100% 

Polymeca AG Heerbrugg, Switzerland 100% 

SwissOptic AG Heerbrugg, Switzerland 100% 

Wiltronic AG Heerbrugg, Switzerland 100% 

Leica Geosystems B.V. Rijswijk, The Netherlands 100% 

Leica Geosystems S.p.A. Milano, Italy 100% 

Leica Geosystems SL Barcelona, Spain 100% 

Leica Geosystems Lda Aboboda, Portugal 100% 

Leica Geosystems A/S Herlev, Denmark 100% 

Leica Geosystems AB Sollentuna, Sweden 100% 

Leica Geosystems AS Oslo, Norway 100% 

Leica Geosystems Ltd. Willowdale, Ontario, Canada 100% 

Leica Geosystems S.A. de C.V. Mexico D.F., Mexico 100% 

Leica Geosystems Ltd. Hong Kong, China 100% 

Leica Geosystems Pty Ltd. North Ryde, Australia 100% 

Leica Geosystems K.K. Tokyo, Japan 100% 

Cyra Technologies Inc. Oakland, CA, USA 100% 

Laser Alignment Inc. Grand Rapids, MI, USA 100% 

Laser Alignment GmbH Eresing, Germany 100% 

Leica Geosystems (Singapore) Pte Ltd. Singapore, Singapore 100% 

Leica Instruments (Singapore) Pte Ltd. Singapore, Singapore (1) 

LH Systems, LLC and Subsidiaries Wilmington, Delaware, USA 50% 

NovaLIS Technologies Ltd. Halifax, Nova Scotia, Canada 38% 

AED Graphics AG Bonn, Germany 25% 

(1) This company is a joint venture between Leica Geosystems (Singapore) Pte Ltd and Leica Microsystems (SEA) Pte Ltd, 

Singapore, which is a company of the Leica Microsystems Group. Leica Geosystems Holdings AG is only, and solely, 

entitled to the results of the geosystems activities for which separate financial records are maintained.


Report of the group auditors 

to the Shareholders and Board of Directors of 


Heerbrugg, Switzerland 

We have audited the consolidated balance sheets of Leica Geosystems Holdings AG and its 

subsidiaries as of March 31, 1999, 2000, and 2001, and the related consolidated statements of income, 

cash flows, and of shareholders' equity for the periods April 1, 1998 to October 2, 1998 and October 3, 

1998 to March 31, 1999 and the years ended March 31, 2000 and March 31, 2001. These consolidated 

financial statements are the responsibility of the Board of Directors. Our responsibility is to express an 

opinion on these consolidated financial statements based on our audits. We confirm that we meet the 

Swiss legal requirements concerning professional qualification and independence. 

Our audits were conducted in accordance with auditing standards promulgated by the Swiss profession 

and with auditing standards generally accepted in the United States of America. Those standards 

require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 

financial statements are free from material misstatement. We have examined on a test basis 

evidence supporting the amounts and disclosures in the consolidated financial statements. We have 

also assessed the accounting principles used, significant estimates made and the overall consolidated 

financial statement presentation. We believe that our audits provide a reasonable basis for our 

opinion. 

In our opinion the consolidated financial statements give a true and fair view of the financial position 

of Leica Geosystems Holdings AG as of March 31, 1999, 2000 and 2001 and the results of operations 

and its cash flows for the periods April 1, 1998 to October 2, 1998 and October 3, 1998 to March 31, 

1999 and the years ended March 31, 2000 and March 31, 2001 in accordance with the International 

Accounting Standards (IAS) and comply with Swiss law. 

International Accounting Standards vary in certain respects from accounting principles generally 

accepted in the United States of America. The application of the latter would have affected the 

determination of the net income of Leica Geosystems Holdings AG expressed in Swiss francs for the 

periods April 1, 1998 to October 2, 1998 and October 3, 1998 to March 31, 1999 and the years ended 

March 31, 2000 and March 31, 2001 and the determination of equity of Leica Geosystems Holdings AG 

also expressed in Swiss francs as of March 31, 1999, 2000 and 2001 to the extent summarized in 

Note 27 to the consolidated financial statements. 

We recommend that the consolidated financial statements submitted to you be approved. 

PricewaterhouseCoopers AG 

Wanda Eriksen Peter Binz 

Zurich 

June 7, 2001 



Financial Statements LEICA GEOSYSTEMS HOLDINGS AG Statutory Financial Statements 


BALANCE SHEETS 

as of March 31, 2000 and 2001 


March, 31 


CHF CHF 

ASSETS 

Current assets 

Banks 

Other receivables 

- 1 

Third parties 1 205 

Own shares - 106 

Short term loans - 864 

Total current assets 1 1'176 

Non-current assets 

Financial assets 

Investments 148'547 217'136 

Loans to Group companies 80'751 242'871 

Other Loans - 5'123 

Intangible assets 2'816 - 

Total non-current assets 232'114 465'130 

TOTAL ASSETS 232'115 466'306 

LIABILITIES AND SHAREHOLDERS' EQUITY 

Current liabilities 

Accruals and deferred income 427 784 

Total current liabilities 427 784 

Non-current liabilities 

Loans 

Third parties 69'504 76'000 

Group companies 13'717 12'755 

Total non-current liabilities 83'221 88'755 

Total liabilities 83'648 89'539 

Shareholders' equity 

Share capital 75'000 113'246 

Share premium - 176'689 

Legal reserves 15'000 15'000 

Reserve own shares - 106 

Free reserves 59'099 58'994 

Available earnings (632) 12'732 

Total shareholders' equity 148'467 376'767 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 232'115 466'306

LEICA GEOSYSTEMS HOLDINGS AG Statutory Financial Statements 

STATEMENTS OF INCOME 

for the years ended March 31, 2000 and March 31, 2001 


Year ended Year ended 

March 31, March 31, 


CHF CHF 

INCOME 

Dividend group companies - 8'646 

Other financial income 4'050 8'592 

Realized exchange gains - 1'218 

Other income 794 1'248 

Total income 4'844 19'704 

EXPENSE 

Financial expense (3'833) (3'711) 

Administrative expense (79) (45) 

Realized exchange loss (475) (942) 

Amortization of incorporation expense (1'065) (1'559) 

Tax expenses (25) (82) 

Total expense (5'477) (6'339) 

Net income/(loss) (633) 13'365 





NOTES TO THE FINANCIAL STATEMENTS 

For the years ended March 31, 2000, and 2001 


NOTES IN ACCORDANCE WITH ARTICLE 663B OF THE SWISS CODE OF OBLIGATIONS 

1. Contingent liabilities 

Under the terms of the Revolving Credit Facility Agreement, amended and restated on July 17, 2000, 

Leica Geosystems Holdings AG is a joint and several guarantor for the repayment of borrowings of 

the subsidiaries up to a maximum amount of CHF 175 million (additionally the various subsidiaries 

of Leica Geosystems Holdings AG are jointly and severally liable as cross guarantors). 

2. Significant Investments 

March 31, 

Interest in 2000 2001 

capital Capital Capital 

Leica Geosystems Finance BV, Rijswijk NLG 100% 40 40 

Laser Alignment Inc, Grand Rapids USD 100% - 0 

Cyra Technologies Inc, Oakland USD 100% - 0 

Leica Geosystems Finance B.V. is a holding and financing company. Laser Alignment Inc. and Cyra 

Technologies Inc. comprise development, production and selling activities. 

3. Authorized Capital 

According to Art. 4b of the Articles of Association of LGS Holdings AG as approved on the General 

Meeting of Shareholders on July 10, 2000, the Board of Directors is authorized to increase up to July 

10, 2002, the share capital through issue of a maximum of 405'000 fully liberated registered shares 

with a nominal value of CHF 50 (in single Swiss Francs) each up to a maximum amount of CHF 

20'250. 

Number Nom. Value 

of shares in CHF 

Authorized capital as approved on July 10, 2000 405'000 20'250 

Authorized capital issued for acquisition of Cyra (220'983) (11'049) 

Outstanding authorized capital as of March 31, 2001 184'017 9'201 

4. Conditional capital 

Art. 4b of the Articles of Association of LGS Holdings AG stipulates: Through the 

exercise of option rights for the purpose of the participation of employees, consultants 

or board members of the Leica Geosystems Group, the share capital of the 

Company shall be increased without any time limitation under the exclusion of the 

subscription rights of the shareholders through the issue of a maximum of 285'786 

fully liberated registered shares with a nominal value of CHF 50 (in single Swiss 

Francs) each up to a maximum amount of CHF 14'289. The issue of shares 

below the stock market price is authorized. The conditions of participation shall 

be decided by the Board of Directors. 

Number Nom. Value 

of shares in CHF 

Conditional capital as approved on July 10, 2000 285'786 14'289 

Conditional capital issued (18'944) (947) 

Outstanding conditional capital as of March 31, 2001 266'842 13'342


NOTES TO THE FINANCIAL STATEMENTS 

For the years ended March 31, 2000, and 2001 


5. Significant Shareholders 

March 31, 


in % in % 

J. & W. Seligman & Co, New York - 5.01 

JP Morgan Chase & Co and its subsidiaries, London - 6.04 

6. Transactions with own shares 

Year ended 

March 31, At a 

2001 Price of 

Acquired on Initial Public Offering 544 375 

Sold (262) 375 

Own shares at year end 282 375 

7. Available earnings 

In view of the considerable acquisition program undertaken by the Company, the Board of 

Directors does not intend to recommend that a dividend be paid to our shareholders in respect 

of fiscal year 2001. Therefore the Board of Directors recommends to the General Meeting of 

Shareholders to carry forward the available earnings of CHF 12'732. 





Report of the statutory auditors 

to the General Meeting of 


Heerbrugg, Switzerland 

As statutory auditors, we have audited the accounting records and the financial statements 

(balance sheet, income statement and notes) of Leica Geosystems Holdings AG for the year ended 

March 31, 2001. 

These financial statements are the responsibility of the Board of Directors. Our responsibility is to 

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

legal requirements concerning professional qualification and independence. 

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

which require that an audit be planned and performed to obtain reasonable assurance about 

whether the financial statements are free from material misstatement. We have examined on a test 

basis evidence supporting the amounts and disclosures in the financial statements. We have also 

assessed the accounting principles used, significant estimates made and the overall financial 

statement presentation. We believe that our audit provides a reasonable basis for our opinion. 

In our opinion, the accounting records, financial statements and the proposed appropriation 

of available earnings comply with the Swiss law and the Company’s articles of incorporation. 

We recommend that the financial statements submitted to you be approved. 

PricewaterhouseCoopers AG 

Kurt Jauslin Beat Inauen 

St Gallen, June 7, 2001

LEICA GEOSYSTEMS HOLDINGS AG Other Accounting Information 

Normalization 

The trend in results, as shown by our audited consolidated financial statements, is distorted to a significant 

extent by (i) the accounting for the October 2, 1998, Acquisition, (as described throughout the "Notes 

to the consolidated financial statements”), (ii) capitalization of certain development costs which began at 

April 1, 1998 (fiscal year 1998/1999), rather than retroactively for all periods presented, in connection with 

the change from reporting under Swiss GAAP to IAS, and (iii) certain exceptional and non-recurring 

items. For Fiscal Year 2001, our operating results have been affected only by (ii) above. 

The normalization calculation, which has not been audited, has not been prepared in accordance with 

IAS or U.S. GAAP and should not be considered an alternative to any IAS or U.S. GAAP measure. The 

normalization calculation is not intended to be a substitute for any other measures under either IAS or 

U.S. GAAP and is solely for illustrative purposes. 

The following table sets forth, for the periods indicated, our EBIT normalized to adjust for the factors described 

above. EBIT represents our operating profit plus/(minus) our net gain/(loss) from associated companies. 

The normalization adjustments are based on significant assumptions and estimates, details of 

which are set out in the notes that follow. 

March 31, 

in CHF million Note 1999 2000 2001 

Operating profit as reported (3,6) 36,6 56,6 

Net income/(loss) from associated companies 3,2 3,1 (1,0) 

Reported EBIT (0,4) 39,7 55,6 

Accounting for the Acquisition 

Revaluation of inventory (1) 41,8 - - 

Amortization of goodwill (2) (3,2) - - 

Depreciation (3) (0,7) - - 

Implementation of IAS 38 

Amortization of development costs (4) (15,8) (13,0) (5,7) 

Non-recurring items (5) (1,3) 4,2 - 

Normalized EBIT 20,4 30,9 49,9 

The following table sets forth, for the periods indicated, our EBITDA, normalized to adjust for the factors 

described above. EBITDA represents EBIT, adding back depreciation and amortization. 

March 31, 

in CHF million Note 1999 2001 2000 

Reported EBIT (0,4) 39,7 55,6 

Depreciation and amortization 23,8 34,0 41,9 

Reported EBITDA 23,4 73,7 97,5 

Accounting for the Acquisition 

Revaluation of inventory (1) 41,8 - - 

Implementation of IAS 38 

Capitalization of development costs (4) - - - 

Non-recurring items (5) (1,3) 4,2 - 

Normalized EBITDA 63,9 77,9 97,5 

The following table sets forth, for the periods indicated, our EBITDA, normalized to adjust for the factors 

described above. EBITDA represents EBIT, adding back depreciation and amortization. 

(1) creased by CHF 41.8 million to fair value, defined as their selling price less the costs of disposal and a 

reasonable profit allowance for selling effort based on profit for similar finished goods and merchandise. 

This adjustment as at the date of the Acquisition reduces the reported gross profit earned on the 

sale of the inventory in the period following the Acquisition. It has been assumed that all inventory as 

at October 2, 1998, was sold prior to March 31, 1999, and hence the full impact of the fair value 

adjustment has been treated as a normalization adjustment in the year ended March 31, 1999. 

(2) The Acquisition resulted in the recognition of goodwill of CHF 142.3 million, which is being amortized 

over a period of 20 years from October 3, 1998. In the periods prior to October 3, 1998, the only amortization 

charge for goodwill related to the goodwill arising on various minor acquisitions made in previous 

years. The normalization adjustment produces a constant goodwill amortization charge of CHF 

7.1 million in each fiscal year. 

(3) The Acquisition resulted in the book value of property, plant and equipment being increased to fair 

value, which in turn resulted in an increased depreciation charge in the periods subsequent to October 

2, 1998. The normalization adjustment increases the depreciation charge in prior periods to 

achieve consistency with subsequent periods. 



Financial Statements LEICA GEOSYSTEMS HOLDINGS AG Other Accounting Informatiom 


(4) Under IAS, development expenditure (as opposed to costs of research) is capitalized in accordance 

with the criteria set out in IAS. Development expenditure is capitalized from the point at which 

the project’s technical feasibility, profitability and payback are established up to the date of product 

release to the market and amortized on a straight-line basis over the lifetime of the products 

concerned, which we have estimated as generally being three years. 

In order to restate fully the results for fiscal 1999, 2000 and 2001 in accordance with IAS, development 

ex-penditure would be required to be identified at least as far back as April 1, 1994 (because 

development ex-penditure capitalized in fiscal 1995 would result in amortization charges through 

fiscal 1998). In preparing our annual financial statements, we did not have sufficient detailed information, 

capable of being audited, to identify development expenditure back to this date. 

In preparing our consolidated financial statements under IAS, development expenditure has therefore 

been capitalized only as from April 1, 1998. As a consequence, the trend in results shown by our audited 

consolidated financial statements for fiscal 1999, 2000 and 2001 is distorted by the following factor: 

– there being no amortization charge for development expenditure in fiscal 1999 and, for fiscal 2000 

and 2001, the charge relating only to development expenditure capitalized after April 1, 1998, and 

not to any development expenditure that would otherwise have been capitalized prior to that 

date. 

For these reasons, estimated normalization adjustments have been made on the following bases and 

as-sumptions: 

– it is assumed that, in each year prior to fiscal 1999, development expenditure would have represented 

35 % of the research and development expenditure in that year; and 

– amortization of development expenditure has been calculated on the assumption that amortization 

commences in the year following the incurrence of the relevant expense and that, in accordance 

with our accounting policy, such expense is amortized over three years. 

The adjustment to development costs amortized in each year reflects the difference between the charge 

calculated on the above basis and that actually recorded in our audited consolidated financial statements. 

(5) Non-recurring items in each year comprised: 

– profits of CHF 1.5 million in fiscal 1999 on the disposal of businesses; 

– costs in fiscal 2000 of settling a legal dispute (CHF 1.4 million), establishing our own sales organization 

in Japan (CHF 1.0 million) and commissioning a special market study (CHF 0.8 million); 

– the write-off of a pension asset of CHF 2.1 million in fiscal 2000 as a result of our withdrawal from 

the defined benefit pension scheme in the UK operated jointly with Leica Microsystems; this was 

offset by a non-recurring profit of CHF 1.3 million resulting from a reassessment of our U.S. pension 

position at the date of the Acquisition; and 

– management fees of CHF 0.2 million in each year since the Acquisition which will not recur subsequent 

to July 2000.

Leica Geosystems AG 

Investor Relations: 

Tel. +41 71 727 44 00 

E-mail: investor@leica-geosystems.com 

Geosystems 

Leica Geosystems AG 

Heinrich-Wild-Strasse 

CH-9435 Heerbrugg 

Switzerland 

Tel. +41 71 727 31 31 

Fax +41 71 727 46 74 

www.leica-geosystems.com

Annual Report 2000/2001

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