PDF, 1.2 MB - Pfleiderer AG

january february march 

april being focused: being better june 

annual report 2002 

july august 

september 

october december

january february march 

■ saving costs through intelligent ■ innovations: Pfleiderer Engineered 

■ growth – but not at any price: 

procurement logistics: Pfleiderer 

Woods presents new decors reflecting the Pfleiderer announces its interest in acquiring 

Engineered Woods has bundled its wood latest design trends at the specialist trade its insolvent wood processing competitor 

procurement activities together in its affili- fair ZOW 2003. 

HORNITEX. However, the price becomes 

ate Interwood GmbH. This company ensures A team of Pfleiderer trainees wins and 

increasingly unrealistic in the face of the 

a constant supply of raw materials for 

receives an award of honor at national level economic realities, and Pfleiderer withdraws 

wood processing and for the biomass power for its entry in the Oberpfalz regional com- from the bidding. 

plants operating at Pfleiderer’s production petition “Youth Researches”, sponsored by 

sites. 

Pfleiderer since 1996. 

■ strengthening market presence, 

■ new strategic direction: The Pfleiderer ■ wirus 

winning new markets: Pfleiderer Engi- Group decides to focus its portfolio on its 

neered Woods takes over new brands and Engineered Woods and Infrastructure 

sales from the Swiss company Fideris AG, Technology segments, thereby divesting its 

further strengthening its market presence Doors and Windows and Insulation Technol- 

in western Europe. 

ogy business centers, both closely linked to 

Thanks to innovative water management 

products, Pfleiderer water systems finds 

lucrative new niche markets for its environmental 

technology. 

the domestic construction industry. 

® april may june 

windows appear independently 

on the market: Pfleiderer AG sells 

its windows activities through a management 

buy-out by a team of top managers 

from the Windows group. All employees are 

taken over. 

■ “solid track” propels pfleiderer into ■ taking stock: The six-month figures 

■ ursa 

the future: The German railways operator, for the first half of 2002 clearly reflect the 

Deutsche Bundesbahn, opens its new high- weak economy. But despite lower results, 

speed link between Cologne and Frankfurt Pfleiderer AG makes the grade in a difficult 

am Main. Pfleiderer track systems produced market. 

and delivered over 180,000 concrete 

sleepers for the section. 

® insulation materials has 

a new future in europe: The Spanish 

company Uralita S.A. acquires Pfleiderer 

Insulation Technology, including its seven 

locations in Germany, Belgium and eastern 

Europe. URSA ® july august september 

Insulation Materials now 

rounds off one of Europe’s leading suppliers 

of building materials. 

■ moralt ® and wirus ® doors find a new ■ considerable reduction in corporate ■ blockboards with their own market 

home: The successful sale of the Doors indebtedness: Pfleiderer AG’s nine-month identity: The traditional name MORALT 

activities to the Danish Vest-Wood Group figures for 2002 provide an initial overview 

marks the end of Pfleiderer’s strategic 

of what effects the company’s new strategic 

divestments, earlier than planned. Produc- direction has already had. The results show 

tion at Oettingen, Mittweida and Lenti is much lower corporate indebtedness due 

continued. 

to income from the divestments, with book 

losses as non-recurring effects. The results 

also mark the company’s separation from 

the German construction industry. 

® 

october november december 

is re-introduced for blockboards produced 

by Pfleiderer Engineered Woods. Sales will 

be managed independently at Bad Tölz.

Group figures Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 

Sales million euros 1,028.4 1,042.0 

Foreign share % 48.4 48.1 

EBITDA million euros 109.5 140.9 

EBIT million euros 48.9 77.9 

EBT continued operations million euros 33.6 55.2 

Result discontinued operations million euros – 52.5 – 14.2 

EBT million euros – 18.8 41.0 

Result after minority interests million euros – 39.7 24.2 

Operative Cash flow million euros 83.3 111.2 

Cash flow after investing activities million euros 102.7 106.2 

Equity ratio % 22.7 20.8 

ROCE % 8.7 11.7 

ROS % 2.0 4.4 

Capital expenditure million euros 44.7 61.1 

Sales per employee million euros 0.165 0.164 

Employees (incl. trainees) cutoff date 6,228 6,360 

thereof in foreign countries cutoff date 1,931 1,988 

Key figures per share Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 

Earnings per share 1 euros – 0.93 0.57 

Cash flow per share 1 euros 1.84 2.53 

Dividend euros – 0.20 

1 based on total share issue of 42,685,000 

Divisions Jan. 1 – Dec. 31, 2002 Wood-Based Infrastructure 

Panels Technology 

Sales million euros 697.5 335.5 

Foreign share % 52.5 39.8 

EBITDA million euros 70.6 45.6 

EBIT million euros 31.9 36.0 

Capital expenditure million euros 19.0 18.0 

Employees (without trainees) average 3,452 1,931

pfleiderer ag – leading in quality and technology 

germany 

Engineered Wood 

Gütersloh 

Neumarkt 

Rheda-Wiedenbrück 

Bad Tölz 

Spexard 

Leutkirch 

Arnsberg 

track systems 

Coswig 

Gernsbach 

Langen 

Neumarkt 

Poles & Towers 

Coswig 

Dinkelsbühl 

Leipzig 

Neumarkt 

Regensburg 

Wind Energy 

Coswig 

water systems 

Neumarkt 

poland 

Engineered Wood 

Grajewo 

Wieruszow 

hungary 

track systems 

Lábatlan 

rumania 

track systems 

Brasov 

spain 

track systems 

Constanti 

Now focused on its Engineered Wood and Infrastructure Technology operations, 

SDAX-listed Pfleiderer AG is one of Europe’s leading systems providers for 

wood-based panels and surface finishes, railway sleeper technology and a vast 

range of infrastructure poles & towers. The products and services provided by 

its business centers “Engineered Wood”, “track systems” and “Poles & Towers” 

make Pfleiderer the preferred partner for the furniture industry and specialist 

retailers, for providers of rail track networks worldwide, and as a supplier of 

communications and power supply infrastructure. 

With 6,200 employees and 28 locations spread over six countries, the 

Pfleiderer Group has annual sales exceeding 1 billion euros. By further internationalizing 

its activities, the company intends to expand foreign sales, presently 

accounting for 48 percent of revenues. With its balanced portfolio of two 

high-performing business segments, Pfleiderer AG is excellently placed to continue 

its path of earnings-led growth and optimized value creation, ensuring a 

sustained increase in value of the company.

usa 

Poles & Towers 

Barstow, California 

Bartow, Florida 

Bay Minette, Alabama 

Bellville, Texas 

Birmingham, Alabama 

Claxton, Georgia 

Early Branch, South Carolina 

Estill, South Carolina 

Mansfield, Texas 

Tuscaloosa, Alabama

2 being focused: being better 

being focused: being better 

Introduction by the Chief Executive 3 

Report of the Supervisory Board 6 

Corporate Governance 10 

Management Report 14 

Market Report 14 

Company Report 17 

Segment Report 25 

Research and Development 40 

Capital Expenditure 42 

Environmental Report 43 

Organization and Personnel 46 

Personnel Report 47 

Risk Report 52 

Marketing and Communication 58 

Investor Relations 59 

Post-Closure Report/Outlook 61 

Consolidated Financial Statements of the Group 68 

Financial Statements of the Legal Entity Pfleiderer AG 126 

In Brief 

Glossary 146 

Index 148 

Multi-Year Summary 150 

Financial Calendar and Contacts 153 

getting stronger: being better. Six well-known journalists portray the strengthes, new directions 

and innovations behind the facts and figures highlighted in our magazine, published separately as part of the 

Annual Report 2002.

we are working for change to ensure the 

long-term success of our company. 

Dr. Jürgen Koch 

introduction by the chief executive pfleiderer ag 3 

Member of the Executive Board 

Finance 

Hans H. Overdiek 


Wood-Based Panels 

Michael Ernst 


Personnal 

Prof. Dr. Ralf H. Bufe 

Chairman of the Executive Board, 

Infrastructure Technology 

Fiscal 2002 saw Pfleiderer AG successfully complete the first major step in what is a new strategic direction 

for the Group. Disposal of our Doors and Windows and Insulation Technology business centers, 

announced in May, was completed by the end of the year, faster than planned. Both centers were 

closely linked to the German construction sector. All transactions have now been completed. The result 

is a decisive improvement in the Company’s risk structure: 

■ We have successfully freed ourselves from the German building sector, with its difficult competitive 

conditions. Trying to achieve this today would be much more difficult, bearing in mind how protracted 

the economic downturn has proved to be. 

■ By focusing activities on our two business segments Engineered Wood and Infrastructure Technology, 

we have defined ourselves more clearly as an industrial supplier with a transparent structure 

combining traditional strengths with future-orientated competences. 

■ Income from the disposal of these segments has permitted us to nearly halve net corporate 

indebtedness and to improve our equity ratio to 22.7 percent. At the same time, we have tightened up 

administrative structures and adjusted personnel costs to the situation.


Our many talks with players on the capital markets have confirmed how important and right 

this strategic re-direction is for the Company. Pfleiderer AG has moved from being a “Bavarian building 

supplier” to become an internationally operating systems supplier for wood-based panels and surface 

finishes, for railway sleeper technology and for a vast range of infrastructure poles and towers. Following 

the reorganization of the German stock exchange indexes, Pfleiderer AG is now listed as a “prime 

standard” in the new SDAX under “Industrial Products and Services.” 

Our year-end operating result came to 33.6 million euros – a figure that must be seen as satisfactory 

in view of the difficult competitive environment. It also shows that we can operate at a profit 

even when the going gets rough. Through increased export activities, we have managed, at least 

partially, to offset lower demand in Germany. And the considerably lower results in the engineered 

woods segment have been made up for by positive growth in our infrastructure technology operations. 

The negative effects on the balance sheet due to book losses and downward revaluations are the 

price we must pay for this change in corporate direction, a move that will ensure that the Company 

continues to develop stably over the coming years. 

Stability must be our first priority in such difficult times. So while our Company has started the 

new fiscal year in much better health, we must not slacken our efforts. The present business situation 

and developments on the capital markets demand that we apply ourselves even further. And considerable 

political and economic uncertainties still lie ahead. 

For that reason we intend to give our fullest attention to 

■ expanding the strategic market positions of our business units, 

■ increasing the international share of our business operations, 

■ boosting total value added by improving margins and reducing costs. 

We shall invest – carefully and specifically – in those targets where we identify real market growth 

potential. This will be by region – for example, by setting up a new wood processing plant in Russia – 

as well as on a sector basis. Here, we intend to expand production capacity for railway sleeper systems 

in order to service new orders and projects. 

Where necessary, we shall streamline products and ranges in our operative areas. This involves 

constantly looking for solutions that have the best chance of long-term success – be it through a 

management buy-out, as in the case of Eltec Elemente-Technik für Möbel und Innenausbau GmbH, or

y looking for a strategic partner with a global presence for our offshore technology for wind 

power converters. 

In the areas of logistics, production and sales, too, we intend to set up and implement new 

concepts, thus optimizing order processing and improving cost structures and earnings power. 

Our strategic goals are clearly defined. In achieving a balance between two high-performing 

business segments we shall 

■ secure coat leadership for commodity products in the engineered woods segment 

■ strengthen our quality leadership for products with high value added, 

■ expand our technological leadership in the infrastructure technology segment 

■ further increase the share of our international activities. 

I would like to warmly thank all employees for their loyalty and hard work, the employer 

representatives for their fair and constructive cooperation, and you, the shareholders, for your trust 

and support. 

The new strategy we have adopted is taking the Group in the right direction. We have already 

reached the first goal on the way to more earnings power and value added. As yet, these successes 

have not been adequately rewarded by the stock exchanges. The uncertainties and weaknesses on the 

capital markets are hitting small and medium-sized companies particularly hard. But our key financial 

figures are talking another language. 

Although we are not getting much support from the markets at present, we intend to continue our 

course with patience and endurance, with courage and through action. Let us take this road together. 

We believe in our success. 

Neumarkt, March 11, 2003 


Chief Executive Officer, Pfleiderer AG


the new corporate strategy adopted in 2002 

is the right starting point that will ensure the 

company’s successful long-term growth in value. 

Ladies and Gentlemen, 

Dear Shareholders, Friends and Associates of Pfleiderer AG, 

Fiscal 2002 saw the Pfleiderer AG undertake a major change in direction, successfully putting the 

Company in a stronger position to grow in value. During the reporting period, and in accordance with 

the legal and statutory obligations, the Supervisory Board was intensively involved in monitoring and 

advising the Company’s management. The Supervisory Board was kept fully informed on all major 

issues relating to the Company’s new strategic direction, as well as about the progress and effects of 

the divestments undertaken. The Supervisory Board was also kept fully informed about business developments 

in general, in what has been a very difficult operating environment. When the approval of 

the Supervisory Board for decisions and measures taken by the Executive Board was required – in particular 

for measures relating to financial and personnel planning and capital expenditure – the members 

of the Supervisory Board carefully examined all matters to be resolved during their meetings, and 

adopted appropriate resolutions on the basis of the written and oral information provided. 

The Supervisory Board held four ordinary meetings in January, May, July and November 2002 

respectively, during which the Executive Board reported in detail about the general state of the Company 

and on current business developments. The Working Committee of the Supervisory Board met four

eport of the supervisory board pfleiderer ag 7 

times during the year under review, in January, April, September and November 2002. Aside from these 

meetings, a regular exchange of views took place between the Chairman of the Supervisory Board and 

the Chief Executive Officer. The Conciliation Committee, set up in accordance with Sec. 27 (3) Mitbestimmungsgesetz 

(German Co-Determination Act) did not meet in the year under review. In the year 

under review, an Audit Committee chaired by Dr. Manfred Scholz was set up in accordance with the 

German Corporate Governance Code. The Audit Committee convened for the first time on March 20, 

2003 to examine the Company’s financial statements. 

Based on the German Corporate Governance Code promulgated by the Federal Government at 

the beginning of 2002, the Supervisory and Executive Boards of Pfleiderer AG drafted Principles of 

Corporate Governance for the Company which extend beyond the general statutory guidelines, adding 

principles of good national and international corporate conduct and rules relating to the particular 

markets in which we are involved. We see the Pfleiderer Principles of Corporate Governance as an important 

factor which will strengthen trust in the Company in its communications with investors, employees 

and business associates alike. This self-imposed rigor will ensure that the Company is run in a 

transparent, responsible manner designed to increase its value, and thereby to increase the confidence 

others have in the way the Pfleiderer AG is managed and controlled. 

Within the framework of scheduled elections to the Supervisory Board, on July 2, 2002, the 

Shareholders’ Meeting elected Mr Hanno Fiedler, General Manager of Ball Packaging Europe, GmbH, 

formerly Schmalbach-Lubeca AG, Ratingen, and Mr Robert J. Koehler, CEO of SGL Carbon AG, Wiesbaden 

as new members of the Supervisory Board representing the employers. Dr. Hanns-Helge Stechl 

and Mr Horst Weitzmann did not stand for re-election. 

In accordance with the German Co-Determination Act, Mr Reinhard Hahn, IG Metall, Frankfurt, 

Mr Josef Rugge-Fechtelpeter, Chairman of the Works Council, Pfleiderer Wood-Based Panels Rheda, and 

Mr Manfred Schmidt, Chairman of the Works Council Pfleiderer Wood-Based Panels Neumarkt, were 

elected at the beginning of June 2002 as new members to the Supervisory Board to represent the 

employees. 

In a meeting on May 7, 2002, the Supervisory Board also granted Dr. Wolfgang Pinegger – member 

of the Executive Board of Pfleiderer AG since October 1999 responsible for Infrastructure Technology, 

and from spring 2000 also responsible for Insulation Technology – leave to resign early from 

his post on the Executive Board. This allowed Dr. Pinegger to place a personal bid for the Insulation 

Technology Business Center, or to cooperate with other bidders. Responsibility for the Infrastructure 

Technology Business Center, comprising the business units Rail Traffic, Masts, Energy/USA and 

Telecommunication was assumed by Prof. Dr. Ralf H. Bufe. Responsibility for the Company’s Wind 

Power activities was delegated to Dr. Jürgen Koch. 

I would like to thank all past members of the Supervisory and Executive Board, both personally, 

as well as on behalf of the shareholders and employees of the Company, for their many years of 

dedicated work.


In accordance with a resolution passed by the Shareholders’ Meeting on July 2, 2002, and in 

my capacity as Chairman of the Supervisory Board, I engaged Ernst & Young Deutsche Allgemeine 

Treuhand Wirtschaftsprüfungsgesellschaft, Stuttgart as public auditors to audit the accounts and 

management report of the Pfleiderer AG and the consolidated financial statements and consolidated 

management report of the Pfleiderer Group for fiscal 2002. In their audit of the annual financial 

statements, drawn up for the Group for the first time in accordance with US GAAP (Generally Accepted 

Accounting Principles) , the auditors focused particularly on the valuation of continued and discontinued 

operations, the impairment of goodwill and investments, as well as the recoverability of inventories, 

receivables and pension accruals. 

The annual financial statements and the consolidated financial statements for year-ending 

December 31, 2002, as well as the consolidated management report, part of the management report of 

Pfleiderer Aktiengesellschaft, have been audited by Ernst & Young Deutsche Allgemeine Treuhand AG 

Wirtschaftsprüfungsgesellschaft, Stuttgart, and have received an unqualified audit opinion. The Supervisory 

Board also examined the annual financial statements and consolidated financial statements 

drawn up by the Executive Board. The audit report by the public auditor was available to all members of 

the Supervisory Board in good time. The public auditor participated in the meetings of Audit Committee 

and informed it of the main results of its audit. 

The Supervisory Board raised no objections as a result of its review of the annual financial statements 

of Pfleiderer AG, the consolidated financial statements and the combined management report 

of the holding company and the Group. The Supervisory Board concurs with the results of the audit by 

the public auditor. It approves the consolidated financial statements and annual financial statements 

for fiscal 2002. The annual financial statements are thus ratified in pursuant to Sec. 172 Aktiengesetz 

(German Stock Corporation Act). 

Ernst & Young Deutsche Allgemeine Treuhand AG Wirtschaftsprüfungsgesellschaft, Stuttgart also 

audited the Dependence Report prepared by the Executive Board relating to the Company’s dealings 

with its affiliated companies, as required by Sec. 312 Aktiengesetz (German Stock Corporation Act). 

The public auditor issued the following opinion: 

“Within the terms of our audit and assessment we confirm that 

1. The information provided in the Report is correct, 

2. The Company did not make excessive payments as part of the transactions mentioned in the 

Report.” 

The Supervisory Board has also reviewed the Dependence Report drawn up by the Executive 

Board. The Supervisory Board has no objections to the concluding statement made by the Executive 

Board and the results of the audit by the public auditor.

eport of the supervisory board pfleiderer ag 9 

In view of the positive effects achived by the successful sale of the Doors and Windows and 

Insulation Technology Business Centers, both closely linked to the German construction sector, book 

losses were knowingly accepted in the annual financial statements for 2002. The deficit incurred 

was offset by drawing on additional paid-in capital of the Pfleiderer AG. Accordingly, and pursuant to 

Sec. 150 (4) Aktiengesetz (German Stock Corporation Act), no dividend can be paid for fiscal 2002. 

In these times of uncertainty, the markets for our products and the financial markets have created 

extremely difficult conditions in which to run a company successfully. The fruits of the new strategic 

direction undertaken by the Pfleiderer Group can therefore only be expected to bear fruit for all 

stakeholders over the medium term. Nevertheless, we see the changes made as having created the 

right starting point for further corporate growth. 

On behalf of all members of the Supervisory Board, I would like to thank the Executive Board, 

the employees’ representatives and all our employees for their application and personal commitment 

over the last twelve months. I would also like to wish those employees of the companies since sold 

good luck and every professional success under the umbrella of their new corporate homes. 

Neumarkt, March 25, 2003 

Ernst-Herbert Pfleiderer 

Chairman of the Supervisory Board


corporate governance 

In 2002, the Corporate Governance Code was promulgated by the Germany government. 

The objective of this legislation is to make Germany’s corporate governance rules transparent 

to national and international investors, in turn strengthening confidence in the way German 

corporations are managed. Sec. 161 of the German Stock Corporation Act requires that stock 

companies make a formal declaration every year that the recommendations of the Corporate 

Governance Code are being, or have been met. Failing this, the declaration must otherwise 

specify which particular recommendations are not, or have not been, applied. 

Pfleiderer’s supervisory and management boards have accordingly made a declaration, 

which was duly published for the first time in December 2002 on the corporate website. 

Beyond this, the supervisory and the management boards have drafted a set of Principles of 

Corporate Governance for Pfleiderer AG. These Principles go beyond the general statutory 

framework, providing guidelines on what constitutes good national and international corporate 

conduct, and how to act in the specific markets in which the Company operates. 

Pfleiderer’s Corporate Governance Principles are a central element for ensuring transparent 

and trustworthy communication with its shareholders, employees and stakeholders. The 

Company’s commitment to ensure that management operates in a transparent and responsible 

manner, and control the Company with the goal of increasing its value, will increase the level 

of trust in Pfleiderer and the way it is managed and supervised. 

The Principles are corporate rules which will be reviewed and revised in as law changes, 

and in keeping with other national and international developments. 

Declaration by the Supervisory Board and the Management Board of 

Pfleiderer Aktiengesellschaft pursuant to the recommendations 

of the German Corporate Governance Code Government Commission 

in accordance with Sec. 161, German Stock Corporation Act 

The Pfleiderer AG complies with the recommendations of the German Corporate Governance 

Code Government Commission. The following recommendations are the only ones not being 

applied: 

– At present, compensation for members of the Supervisory Board comprises only fixed 

compensation. 

– No age limit for members of the Supervisory Board is fixed in the Company’s statues. 

Neumarkt, December 2002 

For the Supervisory Board For the Management Board 

Ernst-Herbert Pfleiderer Prof. Dr. Ralf H. Bufe

1. Introduction 

2. Shareholders and the 

General Meeting 

3. The Management Board 

corporate governance pfleiderer ag 11 

principles of corporate governance 

pfleiderer aktiengesellschaft 

The Pfleiderer Aktiengesellschaft hereby commits itself to the following Principles of Corporate 

Governance. These Principles are designed to ensure that management and supervision of 

the Company is transparent and responsible and maintains the objective of increasing of the 

Company’s value. The Supervisory Board and the Management Board, as well as all directors 

and employees of the Pfleiderer Group, are committed to this objective, which has been 

formally resolved by the Supervisory Board in its meeting on November 21, 2002. The Board of 

Management accepts full responsibility for the observance of these Principles of Corporate 

Governance. 

Pfleiderer’s Principles of Corporate Governance aim to increase the trust of national and 

international investors, customers, employees and general public alike in the way the Company 

is managed and supervised. 

Pfleiderer’s Principles of Corporate Governance provide guidelines on what constitutes 

good national and international corporate conduct, and how to act appropriately in the specific 

markets in which the Company is active. 

Pfleiderer’s Principles of Corporate Governance are not fixed for all times, but are part of 

an ongoing process. As such, they will be reviewed and revised as law changes, and in keeping 

with other national and international developments. Pfleiderer’s Principles of Corporate Governance 

will be published on its corporate website and in its annual report. 

Pfleiderer AG has issued registered shares. Each share carries one vote. No “golden shares” 

exist. 

The General Meeting resolves on the appropriation of net income and the ratification of 

the Management Board and the Supervisory Board. It elects the public auditors and exercises 

all legal rights. 

The Management Board exercises the authorization to issue new shares without preemptive 

rights, the issue not to exceed 10 percent of subscribed capital. The company will 

publish all information and reports, including the agenda for the General Meeting, using electronic 

media on the corporate website. The Company offers voting and proxy voting by Internet 

to facilitate the personal exercise of shareholders’ voting rights. The Company will arrange a 

corporate representative to exercise shareholders’ voting rights in accordance with instructions 

received. 

The Management Board is bound to act in the Company’s best interests and in accordance 

with the Rules of Good Management when performing its statutory duties. The sustainable 

increase of corporate value is the major objective of corporate management. The key statistic 

used to determine this is EVA (Economic Value Added). 

The Management Board coordinates corporate strategic direction together with the 

Supervisory Board, and is responsible for its implementation. It selects effective and efficient 

instruments. In doing so it implements systems for planning, controlling and risk management. 

The Management Board is committed to acting lawfully, and to ensuring that all legal provisions 

are upheld.


4. Supervisory Board 

The Management Board informs the Supervisory Board regularly about all issues of 

importance to the company relating to planning, business development and risk. Deviations 

from any previous plans or targets are reported and explained. The Management Board tends 

to the social responsibilities of the Pfleiderer Group. 

According to Sec. 77, German Stock Corporation Act, the Management Board is in full 

charge of running the Company. Terms of Reference regulate the allocation of areas of responsibility 

for each member of the Management Board and how the Management Board works together. 

Standing Orders state that decisions to be made on matters of fundamental importance 

lie to the full Management Board. Depending on the magnitude of the decision or financial 

transaction involved, approval must also be given by the Supervisory Board. 

The members of the Management Board give their full working capacity to the Pfleiderer 

Group. They are bound by the Company’s best interests and may not pursue personal interests 

which would conflict with the interests of the Company. The members of the Management 

Board shall not accept payments, or other personal advantages, from third parties during the 

discharge of their duties which would interfere with the best interests of the Company or its 

customers. 

The Management Board accepts the specific insider trading rules and commits management 

as a whole to comply with the terms of these rules. 

Compensation of the members of the Management Board is regulated by Sec. 87, German 

Stock Corporation Act. Compensation comprises a fixed salary and variable components. 

The variable components depend on the financial situation of the Company, performance 

and outlook of the Group, as well as performance-oriented elements. Stock options serve as 

variable compensation components with a long-term incentive effect. They are issued according 

to a plan adopted by the General Meeting and the Supervisory Board. Compensation 

and stock holdings are reported in the corporate annual report. Stock option rights must be 

exercised within 3 years of issuance at most. Insider trading rules are applied by setting 

periods during which the exercise of option rights is suspended. 

The Management Board of Pfleiderer AG has adopted rules that also apply to senior 

management eligible to receive stock options. It shall also ensure that compensation for senior 

management throughout the Group is in accordance with these rules. 

The Supervisory Board of Pfleiderer AG is composed of members with the required expert 

knowledge, and specific abilities and experience to enable them to fulfil their advisory and 

supervisory duties so that corporate targets are achieved. These qualifications are taken into 

account when accepting nominations for election to the Supervisory Board. The members of 

the Supervisory Board must have sufficient personal time to perform their duties. 

The Supervisory Board issues Standing Orders. The Chairman of the Supervisory Board 

regularly maintains contact with the Chairman of the Management Board and the Management 

Board, and is informed without delay about any important events. The Chairman of the Supervisory 

Board then informs the members of the Supervisory Board. 

In order to increase its efficiency, the Supervisory Board has formed a Working Committee 

and an Audit Committee. The Working Committee may take decisions on behalf of the 

Supervisory Board in accordance with applicable statutory rules and the Standing Orders. The 

Chairman of the Supervisory Board is not Chairman of the Audit Committee.

5. Communication and 

Information 

corporate governance pfleiderer ag 13 

The members of the Supervisory Board shall keep any information relating to their duties 

secret. Each member of the Supervisory Board is bound by the Company’s best interests. The 

Supervisory Board is informed of any conflicts of interests which may result from a consultancy 

or directorship function with clients, suppliers, suppliers of capital or other business associates. 

Advisory and other service agreements between a member of the Supervisory Board and 

the Pfleiderer Group require approval by the Supervisory Board. 

Compensation of the Supervisory Board and stock holdings of its members are reported 

in the corporate annual report. Representatives of the shareholders and the employees shall 

work together on the Supervisory Board on a basis of consensus. 

Preparations relating to the election of the public auditor, what emphasises the audit 

should take, and matters relating to auditor fees lie to the Audit Committee. The Audit Committee 

is also responsible for preparing the audit of the Consolidated Financial Statements 

including the Management Report. 

When communicating with shareholders and the general public, the Management Board shall 

maintain a policy of transparency, punctual timing, openness, comprehensibility and fair 

treatment. It shall publish all new facts which may arise within the Company’s areas of activity 

not known to the public where these facts are likely to have a substantial impact on the share 

price due to their effect on the assets, financial situation or general course of the Company’s 

business. All major financial dates are published in advance on the corporate website. 

Information about the Company is published via the Internet. All publications are available 

in English. 

The Company shall notify any purchase or sale of Company shares made by members 

of the Management Board or the Supervisory Board, or by related parties, on the corporate 

website in accordance with the rules of “Directors’ Dealings”. 

Neumarkt, January 15, 2003 

Pfleiderer AG 

The Management Board


management report 

market report 

Development of the Economy as a Whole 

The world economy recovered slightly at the beginning of 2002 having apparently overcome 

the effects of September 11, 2001, only to fall back to another low point during the summer. 

According to the German “Ifo World Economic Climate Index”, by December 2002 economic 

activity had almost returned to the same low level of autumn 2001. The threat of war with Iraq, 

increasing oil prices and unusually big declines in share prices on international markets all 

played a part in weakening the global economy. 

In the USA, real GPD grew in 2002 by around 2.5 percent. And while fears of a double 

dip in the summer of 2002 proved misplaced, the economy clearly lost impetus again during 

the fourth quarter. As in the previous year, private consumption proved the mainstay for 

economic demand. However, unemployment rose to an average 5.75 percent, while debt levels 

among private households grew considerably. Nevertheless, consumption did increase in the 

wake of fiscal policy measures, and even private house construction picked up – a development 

not reflected in the commercial construction sector. 

Following the low at the end of 2001, the economies in the member states of the European 

Monetary Union improved slightly, although production only increased very slowly by 

0.8 percent. However, developments forecast in the spring failed to materialize. On average, 

the euro gained around 5 percent on the dollar in 2002, moving up by around 13 percent 

during the course of the year. On the other hand, the euro weakened against the currencies of 

central and eastern Europe. Private consumption was stronger, but demand for capital goods 

declined. 

After the dip at the end of 2001, the German economy stabilized during 2002, although 

no real upturn took hold. According to the “Ifo Institute”, real GDP growth is expected to 

reach no more than around 0.2 percent, even though the starting point in 2001 was very low. 

Weak domestic demand, down by around 1.3 percent on the yearly average, is the main cause 

for the current poor economic performance. Capital expenditure in the construction sector 

fell back by 5.7 percent in 2001. In view of the fall in real income due to lower levels of 

employment and slightly increased savings rates, consumer demand – the driving force for the 

manufacturing sector – declined by 0.5 percent in 2002.

management report market report pfleiderer ag 15 

Wood Processing Industry 

The wood processing industry in central Europe comprises several big private enterprises, 

which operate internationally, and a large number of smaller suppliers. For several years now, 

the industry has been going through a process of consolidation, in particular engulfing smaller 

companies which only operate on a regional basis. The merging of markets throughout Europe 

has accelerated this process. Cost leadership, an international approach and comprehensive 

product ranges are the decisive factors today for the competitive edge of market participants. 

Following an extraordinarily good year for the engineered wood industry in 2000, particleboard 

capacity grew in 2001 by 0.5 million m3 to 36.5 million m3 among member countries 

of the European Panel Federation (EPF). However, growth in 2001 was largely due to restructuring 

within the industry, involving closures, re-starts, production expansions and greenfield 

investments. According to the European Panel Federation, Germany and Italy were the most 

heavily affected, with three production plants closing in each country. Only four (Austria, Czech 

Republic, France and Spain) of the 19 member countries reported growth in capacities. 

The following figures clearly illustrate the concentration process within the engineered 

wood industry: in 2000 there were 177 production plants producing raw particleboard for the 

market, each with an average production capacity of 210,000 m3 . By 2002, this figure had 

dropped to 158 plants, with an average production capacity of 250,000 m3 . As far as medium 

density fiberboard (MDF) suppliers are concerned, however, market growth has been reflected 

in production capacity. The number of MDF production plants in Europe grew from 48 with an 

average capacity of 185,000 m3 , to 54 plants with an average capacity of 210,000 m3 in 2002. 

When examining these figures, it must be remembered that production plants in the key countries 

for engineered wood (Germany, France, Italy, Spain, Belgium and the U.K.) have much 

higher capacities than those plants located in smaller markets. 

According to the European Panel Federation, continuous market growth marked by an expansion 

in production capacity is now at an end. For the first time, the EPF expects a decline 

in production by 1.5 percent to a total of 36.0 million m3 in 2002. 

Raw particleboard accounts for 72 percent of European production capacity, making it 

the most important base material, followed by MDF with 22 percent and oriented strand board 

(OSB)/plywood with 6 percent. Due to the many ways in which MDF board can be worked 

compared to raw particleboard, this material has found greater acceptance in the engineered 

wood market over the last two years. Consumption of MDF increased by 10 percent from 

2000 to 2002, while particleboard fell by 4 percentage points during the same period.


Germany 

Although the European market grew during fiscal 2001, particleboard capacity in Germany 

declined by 7 percent to 9.4 million m3 in 2002 compared to 2000. This reflects the continued 

weakness of the domestic construction and furniture industries. Three production plants, comprising 

a total capacity of 0.9 million m3 , closed in 2001, while a further five plants continued 

operating although insolvent. Overcapacity of around 900,000 m3 continues to hamper the 

market. As a result, the European Panel Federation is forecasting a continuing downward trend 

for 2002, and does not expect the market to pick up before 2003. 

Poland 

In 2001, the Polish market grew sustainably by around 6 percent to 2.8 million m3 . While 

domestic demand remained generally constant at 2.6 million m3 , exports continued to rise, 

particularly to other eastern European markets. 

In view of the weak state of the German market, neighboring European markets have 

grown in importance for Pfleiderer Wood-Based Panels. Today, the Polish market is experiencing 

continued growth and stable prices, with increasing export activities taking place with its 

neighbors. The neighboring western European markets offer further growth through increasing 

export opportunities. Pfleiderer intends to expand its existing presence on these markets 

through its local production sites or by greater export volumes, giving the Company greater 

independence from the German economy. 


The main factors affecting market growth for products manufactured by the Infrastructure 

Technology Business Center are capital expenditure activity by industry, as well as public 

sector spending on measures relating to track systems, power generation, town planning and 

telecommunication. 

The August floods in the eastern parts of Germany caused damage amounting to several 

million euros to the track network of Deutsche Bahn, Germany’s railway operator. Several other 

projects were postponed to ensure the financing needed to reconstruct sections of track destroyed. 

As a result, the market for concrete sleepers increased slightly in the autumn of 2002. 

Apart from that, Deutsche Bahn’s capital expenditure plans to expand the German rail network 

are going ahead as scheduled. 

Privatization in the power generation and supply sector, particularly in the USA, presents 

a growth market for Pfleiderer Masts. In 2001, Pfleiderer’s US-based subsidiary, Newmark Inc., 

experienced greater demand for spun concrete power transmission masts. This trend continued 

unchanged in 2002. 

The German Renewable Energies Act (EEG), promulgated in 2001, provides a legal basis 

for promoting alternative energies. It guarantees minimum payments for production of regenerative 

energy. As such, the Act is of considerable importance for Pfleiderer Wind Energy and for 

Pfleiderer Wood-Based Panel’s co-generation plants.

management report market report/company report pfleiderer ag 17 

company report 

Greater Focus – The Strategic Answer to the Challenges of the Markets 

The Pfleiderer Group’s decision in fiscal 2002 to adopt a new corporate strategy represents a 

major milestone in the Company’s development. The new corporate strategy focuses on operations 

by the Business Centers Wood-Based Panels and Infrastructure Technology. The Doors 

and Windows and Insulation Technology Business Centers, both of which are closely associated 

with the German construction sector, were consequently divested. We are confident that our 

new corporate strategy will sustainably increase the earnings power of the Pfleiderer Group 

and the net worth of the company as a whole. 

The successful sale in 2002 of the above-mentioned business centers linked to the 

construction sector marks the conclusion of the first phase of this new strategic direction. In 

particular, the following objectives have been achieved: 

■ Severance from the German construction sector, with its difficult market conditions, 

■ Reduction of corporate debt and improved equity ratio, 

■ New corporate potential for growth. 

Income gained from the disposals provided the Pfleiderer Group with funds to reduce 

corporate debt 307.2 million euros. 

Presentation of “Discontinued operations” 

Operating results for the Business Centers Doors and Windows, Insulation Technologies, Wind 

Power, Tipla and Eltec, as well as profits and losses from the sale of discontinued operations, 

are shown in the Consolidated Income Statement under “Results of discontinued operations”. 

The Consolidated Income Statement for the previous year has been adjusted to enable a yearon-year 

comparison in accordance with US GAAP. 

Operating results for the Windows Business Unit are accounted for up to June 30, 2002, 

the cutoff date at which this business unit was sold. The cutoff dates for the Doors Business 

Unit and our Insulation Technology operations were October 31 and November 30, 2002 

respectively. 

Accordingly, the assets and liabilities of discontinued operations are summarized in 

the Balance Sheet as of December 31, 2001 as “assets of discontinued operations” or as 

“liabilities of discontinued operations”.


Earnings 

2002 2001 

million euros % of million euros % of 

sales sales 

Sales 1,028.4 100.0 1,042.0 100.0 

Foreign share in percent 48.4 48.1 

Cost of sales – 755.3 – 73.4 – 736.6 – 70.7 

Gross result 273.1 26.6 305.4 29.3 

Other operating expenses – 164.2 – 16.0 – 164.6 – 15.8 

Investment income 0.6 0.1 0.1 0.0 

EBITDA 109.5 10.6 140.9 13.5 

Depreciation, amortization on long-lived and financial assets – 60.6 – 5.9 – 63.0 – 6.0 

EBIT 48.9 4.8 77.9 7.5 

Interest – 15.3 – 1.5 – 22.7 – 2.2 

EBT of continued operations 33.6 3.3 55.2 5.3 

Taxes on income and earnings – 13.2 – 1.3 – 9.2 – 0.9 

Results of continued operations before minority interest 20.4 2.0 46.0 4.4 

Losses from discontinued operations – 52.5 – 5.1 – 14.2 – 1.4 

Taxes on discontinued operations – 3.0 – 0.3 – 4.2 – 0.4 

Results before minority interests – 35.1 – 3.4 27.6 2.6 

Minority interests – 4.6 – 0.5 – 3.4 – 0.3 

Results after minority interests – 39.7 – 3.9 24.2 2.3 

The Pfleiderer Group reported sales of 1,028.4 million euros in fiscal 2002 for its continued 

operations, the Wood-Based Panels and Infrastructure Technology Business Centers. This is 

a slight drop compared to the previous year of 1,042.0 million euros. Foreign sales already 

contribute 48 percent of total Group sales. The economic situation remained difficult, even 

though Pfleiderer Wood-Based Panels compensated for low price levels in Germany through

management report company report pfleiderer ag 19 

high sales volumes and strong exports. Continued pressure on prices in Germany has had a 

sustained effect on the Company’s earnings position for this business center. On the other 

hand, the Infrastructure Technology Business Center recorded satisfactory business in 2002 

thanks to its strong position and the stability of the market it serves. 

Earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 22.3 percent 

to 109.5 million euros (2001: 140.9 million euros). Earnings before interest and taxes 

(EBIT) for continued operations came to 48.9 million euros for the Pfleiderer Group (2001: 

77.9 million euros). This reflects the generally lower margins due to market conditions in the 

German engineered wood business. Earnings before taxes (EBT) for continued operations 

came to 33.6 million euros, 39.1 percent lower than the previous year (55.2 million euros). 

Non-recurring special effects amounting to 52.5 million euros due to disposals and the 

presentation of discontinued operations – Doors and Windows, Insulation Technologies, Wind 

Power, Tipla and Eltec – are shown under “Results of discontinued operations”. This figure 

includes expenses of 8.0 million euros incurred for research and development, less a subsidy 

of 1.3 million euros, for the Wind Power Business Unit, producing a result after minority 

interests of –39.7 million euros (2001: 24.2 million euros). 

Cost of materials, including changes to inventories, came to 48.5 percent of sales in 

2002, a significant increase compared to the previous year (43.4 percent). On one hand this 

was due to price-related effects from changes in inventories. On the other hand, the procurement 

department was not able to balance the decline in sales margins in spite of greater 

efforts. 

At around 15 million euros, personnel expenses as a percentage of sales were slightly 

lower at 23.6 percent, despite lower sales (2001: 24.7 percent). However, greater cost saving 

measures in the personnel area more than compensated for the effect of lower margins and 

a three-percent salary increase. 

Depreciation and amortization as a percentage of sales remained largely unchanged at 

5.9 percent (2001: 6.0 percent) 

Net interest improved over the previous year by 0.7 percent of sales. Interest charges 

were reduced by repaying loans carrying interest rates above the average rates of other Group 

liabilities.


Net Assets and Financial Position/Balance Sheet Structure 

Dec. 31, 2002 Dec. 31, 2001 

million euros % of balance million euros % of balance 

sheet total sheet total 

Cash and cash equivalents 58.2 6.6 55.8 4.2 

Other assets 

Assets of discontinued 

271.7 30.6 343.3 25.9 

operations 35.0 3.9 345.2 26.1 

Current assets 364.9 41.1 744.3 56.2 

Property, plant and equipment 381.5 43.0 417.6 31.5 

Intangible assets 102.4 11.5 107.5 8.1 

Other long-lived assets 38.6 4.3 55.2 4.2 

Fixed assets 522.5 58.9 580.2 43.8 

Total assets 887.4 100.0 1,324.5 100.0 

Dec. 31, 2002 Dec. 31, 2001 

million euros % of balance million euros % of balance 

sheet total sheet total 

Liabilities and other 

short-term liabilities 179.9 20.3 188.1 14.2 

Financial liabilities 

Liabilities of discontinued 

42.9 4.8 124.9 9.4 

operations 23.3 2.6 207.7 15.7 

Current liabilities 246.1 27.7 520.7 39.3 

Long-term financial 

liabilities 322.6 36.4 397.4 30.0 

Accruals for pensions 61.3 6.9 59.8 4.5 

Other long-term liabilites 56.1 6.3 71.3 5.4 

Minority interests 45.5 5.1 46.8 3.5 

Long-term liabilities 485.5 54.7 575.3 43.4 

Shareholders’ equity 155.8 17.6 228.5 17.3 

Total liabilities and 

shareholders’ equity 887.4 100.0 1,324.5 100.0

Equity ratio 

in % 

22.7 

20.8 

02 01 


In accordance with US GAAP, those operations of the Group to be sold are summarized as 

current assets or short-term liabilities under “assets of discontinued operations” or “liabilities 

of discontinued operations”. Adding long-lived assets and long-term liabilities to the short-term 

positions makes it easier to compare the balance sheet structure of continued operations with 

the previous year. What cannot be seen is the significant effect resulting from the sale of the 

Insulation Technology and Doors and Windows Business Centers, in particular greatly reducing 

the amount of capital tied up in long-lived assets, thus reducing the need to finance this. 

The effects of selling these operations are shown in the Consolidated Financial Statements in 

section IV No. 16. 

The objective of the disposals carried out in 2002 includes improving the balance 

sheet structure, as the key financial data shows. The equity ratio, including adjustments for 

minority interests, increased by 1.9 percent to 22.7 percent compared to December 31, 2001. 

Over the medium term, we are aiming to achieve an equity ratio of 25 percent. The ratio of 

equity to long-lived assets rose by 2 percent to 38 percent, improving the overall asset risk 

structure. 

Calculation 2002 2001 

Asset ratio Long-lived assets : current assets 146% 144% 

Gearing Net borrowing : equity 153% 179% 

Liquidity ratio 1 Equity : assets 38% 36% 

Liquidity ratio 2 Equity + long-term borrowing : assets 99% 88% 

Liquidity ratio 3 Equity + long-term borrowing : assets + 

inventories 80% 70% 

Equity ratio Equity : balance sheet total 22.7% 21.0% 

(Calculated including assets and liabilities shown under discontinued operations) 

Income from the sale of the Insulation Technology and Doors and Windows Business Centers 

reduced net corporate debt (short-term and long-term financial liabilities less cash funds) 

to 307.2 million euros. As part of the sales of operations, financial liabilities amounting to 

29.5 million euros were taken over from the acquiring parties. 

Currency translation effects from consolidated foreign affiliates in the USA and Poland 

also resulted in a reduction in equity. 

Due to the weaker earnings situation, return on capital employed (ROCE) is lower at 

8.7 percent, compared to 11.7 percent in the previous year. In 2002, poor earnings affected 

the ROCE of the Wood-Based Panels Business Center, which fell to 7.9 percent after a 

level of 13.4 percent in 2001. In the Infrastructure Technology Business Center, reducing the 

amount of capital employed by 46 million euros resulted in an improvement to ROCE from 

19.1 percent in 2001 to 28.3 percent in 2002. The Group is targeting an ROCE of 15 percent 

over the medium term.


Financing 

Refinancing in the Pfleiderer Group is directed at securing the Company’s long-term future. 

Long-term liabilities from loans have maturity periods up to 2008 and carry an average interest 

charge of less than six percent. 

The rating given by Fitch Ratings Ltd was revised in May and September 2002. While in 

May our initial rating of BBB- for senior unsecured debt was confirmed, this was downgraded 

to BB+ in December. The main reason for the downgrade is the continued difficult market 

environment for engineered woods. However, this downgrade does not impair the Company’s 

financial position, as we still have available credit lines amounting to a nine-digit sum and no 

significant borrowing is expected in the near future. 

Hedging measures against exchange rate risks due to business conducted outside the 

euro zone means that fluctuations in results can be limited. International business is largely 

carried out though our own production sites abroad, with the Company involved in only a low 

level of export activity. The low level of export activity and relatively stable currency exchange 

rates means that no significant risks are expected from changes in exchange or interest rates. 

Derivative Financial Instruments 

Derivative financial instruments are only used by the Pfleiderer Group to hedge currency exchange 

or interest rates for transactions which are part of the Company’s normal operations. 

Hedging activities are normally conducted centrally by Pfleiderer AG and Pfleiderer Finance 

B.V. on behalf of the Company’s consolidated companies. More information is provided in the 

Notes to the Consolidated Financial Statements.


Value Added Account 

Value added represents the difference between total performance of the Company and the 

consumed value of products and services drawn from outside. Those involved – employees, 

local authorities, lenders, company/shareholders – and their calculated proportional contribution 

to the value added process are reported. 

2002 2001 

million euros in % million euros in % 

In 

Sales 1,028.4 1,042.0 

Other income 20.5 20.3 

Total 1,048.9 100.0 1,062.3 100.0 

Cost of materials/ 

changes to inventories – 499.0 – 47.6 – 454.3 – 42.8 

Other costs – 197.1 – 18.8 – 209.0 – 19.7 

Depreciation/amortization – 60.6 – 5.8 – 63.0 – 5.9 

Net value added 292.2 27.9 336.0 31.6 

Out 

Personnel expenses 243.3 83.3 258.1 76.8 

Taxes 13.2 4.5 9.2 2.7 

Loans (interest) 15.3 5.2 22.7 6.7 

Company/shareholder 20.4 7.0 46.0 13.7 

292.2 100.0 336.0 100.0 

Total operating performance fell by around one percent compared to fiscal 2001. The increase 

in material costs was largely due to changes in inventories. Other costs were reduced by a 

remarkable 12 million euros through savings made in the production process and in administration. 

The largest part of net value added – 83.3 percent – accrued to Group employees from 

wage and salary payments. The tax rate was slightly higher in the year-on-year comparison. The 

Company and shareholders accounted for 7 percent, while interest was considerably reduced 

from 7 to 5 percent.


Net Assets and Earnings of Pfleiderer AG 

The holding company, Pfleiderer AG, is solely responsible for the strategy and management of 

the Group. This means that the earnings position of Pfleiderer AG is closely connected to the 

success of the Pfleiderer Group. 

For Pfleiderer AG, fiscal 2002 was characterized by the new strategy adopted by the 

Pfleiderer Group, and thus by the effects of divesting indirect and direct holdings. In particular, 

it should be pointed out that losses realized in the Financial Statements of Pfleiderer AG had 

been carried in the Consolidated Financial Statements in previous years. Adding to this are 

one-off losses by affiliate companies, incurred through impairment adjustments, either because 

certain inventories proved difficult to sell, or because certain investments were recorded 

at net realizable value. Total realized losses, including consultancy expenses and follow-up 

charges from the disposals, come to 178,317 thousand euros, as reported under extraordinary 

results. 

Investment results in 2002 were affected by expenses incurred through the absorption of 

losses carried by affiliated companies, while investment income from the previous year related 

to a period of more than 12 months, due to the conversion of the fiscal year to run parallel 

with the calendar year. 

After adjusting for profits brought forward from the previous year, the net loss for the 

year totaling 197,763 thousand euros was reduced to a provisional accumulated deficit of 

191,084 thousand euros. In order to avoid this accumulated deficit, the Executive Board proposed 

to the Supervisory Board that parts of the capital reserve and other reserves be used 

to compensate the loss. The Supervisory Board has accepted this proposal. Accordingly, 

Pfleiderer AG reached break even as of December 31, 2002. 

Sale of the Company’s Insulation Technology and Doors and Windows operations 

has resulted in Pfleiderer AG significantly reducing the level of capital tied up. This is clearly 

illustrated by the decline of the balance sheet total by 112,750 thousand euros to 427,330 

thousand euros. More specifically, financial assets were reduced by 77,277 thousand euros to 

298,518 thousand euros and accounts receivable from affiliated companies by 55,856 thousand 

euros to 37,765 thousand euros. 

Non-recurring effects from value adjustments and sales have reduced the equity of 

Pfleiderer AG, but it still remains at around 40 percent of the balance sheet total. On the other 

hand, capital uptake from outside sources rose by 93,218 thousand euros. At the same time, 

liabilities to banks fell by 43,576 thousand euros to 20,839 thousand euros, while interestcarrying 

liabilities to affiliated companies rose by 136,794 thousand euros to 208,158 thousand 

euros. Interest-carrying liabilities to affiliated companies particularly relate to the Dutch financing 

company Pfleiderer Finance BV, Deventer/Netherlands. The Dutch financing company 

refinances itself via the capital markets. 

Dividend 

In view of the positive effects to be achieved by divesting the Insulation Technology and Doors 

and Windows Business Centers, the Company consciously accepted book losses shown in the 

Consolidated Financial Statements for 2002. These negative non-recurring effects are greater

Arnsberg 

Bad Tölz 

Gütersloh 

Neumarkt 

Leutkirch 

Rheda-Wiedenbrück 

Spexard 

Grajewo 

Wieruszow 

management report company report/segment report pfleiderer ag 25 

in the Financial Statements of the holding company, Pfleiderer AG. As a result, the Company 

has decided to make use of its capital reserve to compensate for these effects. According to 

Sec. 150 (4) of the German Stock Corporations Act (AktG), no payment of dividends can be 

made for the fiscal year 2002. 

Dealings with Affiliated Companies 

In its report on dealings with consolidated (affiliated) companies, Pfleiderer AG made the 

following statement for fiscal 2002: 

“Taking into account all circumstances known to us when transactions were reported, 

appropriate consideration was received in all cases. No measures were taken or not taken at 

the instruction or in the interests of Pfleiderer Unternehmensverwaltung GmbH & Co. KG or 

companies affiliated to Pfleiderer Unternehmensverwaltung GmbH & Co. KG.” 

segment report 

wood-based panels 

Pfleiderer produces raw particleboard and surface finished products at 9 locations in Germany 

and Poland and employs 3,452 people. Around 52.5 percent of its sales of 697.5 million euros 

are generated outside Germany. Pfleiderer Wood-Based Panels is one of the most profitable 

suppliers in Europe, with leading market positions in eastern Europe and Germany and a ROCE 

of 7.9 percent. 

Production Sites Wood-Based Panels 

� 

� 

� 

� 

� 

� 

� 

� 

�


27.3% 

6.9% 

■ Direct Coated 

■ HPL 

■ Postforming Elements and 

Blockboards 

Yearly production surfacefinished 

products, Germany 

65.8% 

Products, Production 

Pfleiderer produces and markets wood-based panels, in particular raw particleboard, as well as 

a range of surface-finished products such as direct-coated particleboard, melamine faced 

board, decorative materials, high-pressure laminates and post-forming elements. Pfleiderer also 

supplies a comprehensive range of décor materials in a wide variety of colors and designs on 

raw particleboard from its own production – as well as on MDF and OSB laminates. Products 

include well-known brands such as Duropal ® , Thermopal ® , Innotec ® and Eltec ® . Duropal alone 

has a decor catalogue of 284 designs in 3 formats. Numerous surface structures are available 

in a range of thicknesses and on different materials, including melamine and ABS edgings. 

Pfleiderer’s products provide architects, interior designers, shop outfitters and furniture producers 

with state-of-the-art combinations and innovative designs. 

With six production sites in Germany (Gütersloh, Rheda-Wiedenbrück, Arnsberg, 

Leutkirch, Bad Tölz and Neumarkt), Pfleiderer produces around 2.1 million m3 of raw particleboard, 

61.7 million m2 of direct-coated board, 25.6 million m2 of high-pressure laminate and 

6.5 million m2 of post-forming elements and blockboard. With a market share of 24 percent, 

Pfleiderer is market leader in Germany in the direct-coated particleboard segment. 

In Poland, Pfleiderer Wood-Based Panels has two production sites. In Grajewo and 

Wieruszow, raw particleboard and direct-coated particleboard is produced, as are films and 

foils used in board coating. Pfleiderer’s market share in Poland for direct-coated particleboard 

is estimated to be around 30 percent. In December 2002, production of post-forming elements 

started at the Company’s Polish affiliate Prospan S.A., with an annual capacity of approximately 

675,000 m2 . 

Pfleiderer production plants manufacturing raw particleboard and tongue and groove 

boards ran a full capacity throughout 2002, with higher exports compensating for weaknesses 

on the German market. Following changes in demand, capacity in other product areas was cut 

back. As in the previous year, prices and sales of high-pressure laminates and post-forming 

elements were satisfactory in fiscal 2002. In view of this, production capacity at the Arnsberg 

plant was increased by adding a new continuous-run press. As a result, Pfleiderer can now 

produce laminates in various formats in Arnsberg, giving access to further segments of the 

market. 

No production stoppages due to significant events occurred in 2002. Two minor breakdowns 

were reported at the Newmarkt plant. These were due to an explosion caused by 

overpressure in the wet particle unit, and earlier than scheduled maintenance on a boiler in the 

power generation plant. Production downtime was covered by drawing on existing stocks and 

back-up supplies from other sites within the Pfleiderer Group. All orders were completed on 

time. Scheduled downtime for maintenance and repair work took place during holiday periods, 

offsetting the effects of cyclical ordering during the year.

17 % 

19 % 35% 

29% 

■ Industry 

■ Export 

■ Special Trade 

■ Interior Design/Thermopal 

Customer segments, Germany 

management report segment report pfleiderer ag 27 

As a matter of practice, all production processes are continuously monitored to see 

where improvements can be made or processes rationalized. Due to the high level of automation 

already in use, no further major rationalization measures in wood-based panel production 

were made. However, ways of better utilizing resources during production are constantly being 

examined and optimized. In particular, this involves the use of new, lighter materials such 

as core papers, more economic use of the raw material wood, as well as higher processing 

speeds. 

The introduction of a production and logistics network in 2003 resulted in shifting manufacturing, 

coating and cutting operations, particularly at the Gütersloh site. The aim was to 

achieve optimal utilization of all plants, bearing in mind their respective production costs, as 

well as to maintain uniform standards. By setting up central warehouses in Germany, all types 

of products can be delivered to customers at short notice via the shortest transport routes. 

Quality Management 

Production at Pfleiderer Wood-Based is certified according to DIN EN ISO 9001. An annual 

technical audit was carried out in all areas of production, with no serious non-compliances 

determined in 2002. A product origin control system was introduced at the Polish locations. 

This system monitors product origin, with the benefit to customers of acting as an indicator 

with regard to quality standards. 

Technical reject levels came to around 0.20 percent for raw particleboard and 0.24 percent 

for direct-coated products. This is a low long-term level in both product areas. 

Sales/Orders on Hand 

Industrial buyers, particularly the furniture industry, account for around 35 percent of sales 

and are the largest group of customers for Pfleiderer Wood-Based Panels in Germany. With 

sales of around 19.4 billion euros, Germany is the biggest furniture market in western Europe, 

followed by Italy (11.6 billion euros) and the U.K. (9.6 billion euros). The current weak state of 

the furniture and building sectors has weakened demand for particleboard in Germany. Already 

facing further concentration and earnings difficulties, these sectors are currently suffering 

from low consumer demand. As a result, the German furniture industry had to record a downturn 

in sales of around 2.7 percent in 2001. According to the VdDK, the umbrella organization 

of the leading German kitchen furniture manufacturers, sales in the first ten months of 2002 

declined by a further 10 percent to around 16.9 billion euros. For the full year 2002, the VdDK 

expects sales to drop by a further 8 percent. 

Kitchen furniture manufacturers, the most important group of customers for Pfleiderer 

products within the furniture sector, reported a decline in sales of 7.2 percent, to 3.2 billion 

euros in the first eleven months of 2002. The fact that the number of plants producing kitchen 

furniture has dropped by 11.7 percent is evidence enough of the state of the kitchen furniture 

industry. 

Pfleiderer accounts for 29 percent of its wood-based product sales through exports, 

particularly to the Benelux countries, the U.K., France, Denmark and Austria. The specialist 

wood trade is the second biggest buyer of Pfleiderer wood-based products, accounting for 

around 17 percent of sales. This segment, too, has experienced a fall in sales of around 6 percent 

to 9.4 billion euros.


Prices 

Low consumer spending in Germany is reflected in the depressed level of demand for furniture 

and interior outfittings. The feedback effect this has had on supplier industries has put manufacturers 

under greater pressure to fill production capacities. This pressure has been exacerbated 

by increased production costs, mainly due to a three-percent increase in wages. The 

resulting over-capacities and price adjustments have been further aggravated by the insolvency 

of a major market participant in Germany. 

Overall, prices obtained for standard raw particleboard products have fallen in Germany 

by up to 21 percent, compared to 2000. Outside Germany, developments have not had the 

same effect. Here, Pfleiderer has experienced a fall in prices of around 6 percent for raw particleboard 

and around 0.5 percent for direct-coated board. 

The direct effect of lower price levels made itself clearly felt on results in 2002. However, 

a further fall in results was stopped by strict cost management policies adopted in previous 

years. 

Sales/Results 

2002 2001 

million euros million euros 

Sales 697.5 723.5 

EBITDA 70.6 106.3 

EBIT 31.9 64.3 

The Wood-Based Panels Business Center reported sales of 697.5 million euros in fiscal 2002. 

This is a decline of around –3.6 percent on the previous year (723.5 million euros). Despite 

the drop in demand and lower price levels, Pfleiderer was able to compensate largely for the 

downturn in sales in this Business Center through greater export activities. Strict cost management 

also helped ward off negative effects. Around 52.5 percent of sales came from outside 

Germany. 

However, earnings before interest, taxes, depreciation and amortization (EBITDA) were 

down by –33.6 percent to 70.6 million euros (2001: 106.3 million euros). These lower earnings 

reflect the market conditions in Germany – continued lower demand in the furniture industry, a 

major competitor producing under insolvency conditions and overcapacities in the market have 

resulted in prices continuing to spiral downwards in 2002. Earnings before interest and taxes 

(EBIT) were down by –50.4 percent to 31.9 million euros (2001: 64.3 million euros). 

Despite all this, in a market under pressure Pfleiderer Wood-Based Panels is one of the 

most profitable suppliers, with a ROCE of 7.9 percent.

16 % 

20% 

11 % 

3% 

■ DBS 

■ Chipboard 

■ Postforming Elements 

■ HPL 

■ Tongue and groove board 

Share of sales product segments 

Wood-based panels 


50% 

Sales by Product Group 

Direct-coated particleboard is the product group with the highest sales in Germany for 

Pfleiderer Wood-Based Panels, accounting for around 50 percent of sales. This is followed by 

raw particleboard (around 20 percent), and post-forming elements (around 16 percent). 

High-pressure laminates (11 percent) and tongue and groove board (3 percent) round off the 

product ranges. 

Sales by Region 

In 2002, Pfleiderer’s Wood-Based Panels Business Center recorded around 47.5 percent of 

sales in Germany. Accordingly, the home market remains the most important market in terms 

of both total volume and sales. Sales in this market were down by around 2 percent compared 

to 2001. However, the 2 percent increase in exports proved a welcome development, underpinning 

the Company’s focused strategy of greater independence from the German economy. 

Overall, exports generated around 29 percent of sales for the Company’s wood-based 

products. The most important export countries for Pfleiderer Wood-Based Panels are the 

Benelux countries, France, the U.K., Denmark and Austria. The percentage of exports to the 

U.K. increased by 3 percent from 14 to 17 percent, while a hard-fought Benelux market 

declined by 2 percent to 24 percent. In France, the Company has created its own sales and 

distribution network, with exports up from 6 to 7 percent. 

Pfleiderer is present on the Polish market through two sites, Grajewo and Wieruzow. 

Accounting for around 19 percent of wood-based panel sales for the Pfleiderer Group, the 

Polish market remains stable. Here, too, greater quantities were sold, offsetting a fall in prices. 

Nevertheless, sales of foil produced by Pfleiderer for board coating declined. On the other 

hand, film sales, another decor product, increased strongly. Higher sales of Pfleiderer’s core 

products – raw particleboard and direct-coated boards – almost completed compensated for 

the fall in prices, with exports to the Russian Federation strongly up. It should also be noted 

that in the Polish market neither the decline in prices, nor lower demand are as serious as in 

the German market. 

Switzerland 

With effect from May 1, 2002, Pfleiderer Holzwerkstoffe GmbH & Co. KG took over the sales 

organization of the Spanplattenwerke Fideris AG (Switzerland). In doing so, Pfleiderer Wood- 

Based Panels has greatly expanded its qualitative and quantitative position in the Swiss market. 

As well as integrating the distribution network of Spanplattenwerke Fideris AG, Pfleiderer took 

over the latter’s customers and sales staff, as well as its established Swiss brands Homoplax 

and Novopan.


The quantity of raw wood involved 

in particleboard production represents 

a major logistics challenge. Just 

one week’s demand for one particleboard 

plant and its biomass generator 

equals a four-meter high stack spread 

over an area the size of the playing 

field at the Munich Olympic Stadium 

– or daily delivery by around 200 

trucks. 

Procurement 

Ensuring procurement for operations while tying up as little cash as possible is a central principle 

of the Pfleiderer Group’s purchasing strategy. Our intra-Group supply chain management 

system ensures that required quantities and qualities of raw materials are available on a justin-time 

basis. This applies to both suppliers and customers. As a result, costs and inventories 

are substantially reduced, to the benefit of both Pfleiderer and its customers. Alternative 

suppliers are available for each site and type of material involved. Medium-term framework 

agreements with strategic suppliers enable volumes and purchase prices to be planed on a 

stable basis. 

Building on strategic alliances with selected suppliers, Pfleiderer was able to keep 

prices for purchased raw materials stable in various areas in 2002, despite the rising cost of 

pre-products. Supplies of chemical raw materials are secure in view of the oligopoly within 

the chemicals sector. While cost increases on world markets for chemical pre-products such 

as methanol were completely offset, the negative effects of these price increases on earnings 

were minimized through medium-term agreements with strategic associates. Prices of other 

raw materials such as urea, phenol, resins and paraffin remained stable in 2002. The price situation 

for décor materials and white paper is also stable. 

Interwood GmbH 

The German Renewable Energies Act (EEG) and the Technical Directive on Urban Waste (TASI) 

have created an important legal framework, resulting in significantly greater recycling of used 

wood. Interwood GmbH was formed at the beginning of 2002 to safeguard the procurement of 

fresh and used wood for particleboard production and the co-generation plants. Interwood 

also trades in lumber, sawmill waste and used wood from around 2,000 suppliers. Apart from 

supplying Pfleiderer’s own needs, Interwood sells to other companies, bundling the whole 

demand side. Wood is used for thermal conversion as a fuel in biomass power plants, and also 

as the basic raw material used in the production of particleboard. The annual quantity traded 

came to around 10 million metric tons in 2002. 

Apart from Pfleiderer’s plants, Interwood GmbH also supplies six power generation 

utilities run by major energy providers such as E.On and RWE. Long-term supply contracts, 

together with agreements with forestry companies and timber traders, guarantee that our 

business is on a firm footing.

Barstow, California 

Bartow, Florida 

Bay Minette, Alabama 

Bellville, Texas 

Claxton, Georgia 

Early Branch, South Carolina 

Estill, South Carolina 

Mansfield, Texas 

Tuscaloosa, Alabama 

Overall, Pfleiderer is Europe’s leading 

manufacturer of poles and towers and 

is number two worldwide for these 

infrastructure products. 


infrastructure technology 

The Infrastructure Technology Business Center comprises the Business Units Rail Traffic, 

Masts, Telecommunication and Wind Power. Spread over 17 locations and employing a total of 

1,931 people, Pfleiderer Infrastructure Technology reported sales of 335.5 million euros in 

2002 and enjoys a leading position on various markets. 

Production Sites Infrastructure Technology, USA 

Masts/USA 

Production, Products 

The Masts Business Unit is a leading manufacturer in Europe and the USA of masts and 

towers made of spun concrete, steel or fiberglass. Products include power transmission masts, 

lighting and advertising masts, as well as wind converter towers. Pfleiderer supplies a wide 

range of customers in the fields of power generation, urban development and telecommunications. 

Our masts are used in architecturally sensitive surroundings such as the Pinakothek 

Museum of Modern Art in Munich or the Federal Supreme Court in Karlsruhe, as well as for 

flag and advertising poles for hotel and restaurant chains, filling stations and car parks, as 

floodlight masts in sports stadiums, in airport apron areas, as power transmission masts, or as 

compact wind converter towers. Among our customers are such well-known names as DEA, 

Aral, IKEA, McDonalds, Burger King, Vodafone, MobilCom, O2, E-Plus, national TV and radio 

networks, Deutsche Bahn, RWE, E.ON and GE. We use spun concrete technology to produce 

masts of extremely high strength with smooth surfaces, making Pfleiderer a technological 

leader of its field.


171.7 

Sales masts BU, USA 

in million euros 

161.7 

02 01 

Last year, Pfleiderer sold around 

9,000 metric tons of spun concrete 

masts, around 150,000 steel mast, 

7,500 fibreglass masts, and 29,000 

metric tons of steel towers to Germany 

and its neighboring states. 

In the USA, Pfleiderer sold around 

140,000 metric tons of concrete 

masts, around 8,800 metric tons of 

steel masts and around 25,000 fibreglass 

masts. 

In the lighting and power transmission masts segments, Pfleiderer has extended its 

leading market position in Germany in what remains a stable market. With its wind converter 

towers produced in Leipzig, the Masts Business Unit has been able to harness very dynamic 

market growth, further strengthening its position as a leading independent supplier. 

Pfleiderer is represented in the USA by its affiliate Newmark International Inc. Spread 

over eight different sites, this company produces spun concrete, steel and fiberglass poles for 

power generators, mobile phone providers and sports stadiums. The latest plant was opened in 

October 2002 in Barstow, California in order to cope with increased demand in the southwest 

of the USA, as spun masts start to replace the still commonplace wooden poles. 

As part of the privatization process in the power generation market in the USA, the regulatory 

authorities are promoting the creation of regional networks run by independent utilities. 

This will lead to greater competition, and thus higher available capacity and lower electricity 

bills for consumers. Newmark International Inc. is profiting from the increased number of 

utilities and the higher demands they are placing on companies. Due to the excellent characteristics 

of its spun concrete masts (cheaper than steel masts, longer life than wooden poles), 

Newmark International Inc. is experiencing increased demand, particularly in the south and 

southeast of the USA. Apart from its new plant in Barstow, which has just gone on stream, 

Newmark International’s plants are running close to capacity. 

Pfleiderer’s steel mast plants in Dinkelsbühl and Regensburg also ran at high capacity 

in 2002. The concrete mast plants in Neumarkt and Coswig have profited from greater product 

uptake following higher short-term demand for advertising masts. Steel tower production in 

Leipzig is primarily aimed at manufacturers of wind converters. Here production ran at full 

capacity in 2002. 

Production capacity for antenna masts in our spun concrete mast plants was adjusted 

because telecommunications providers have postponed setting up UMTS networks. In particular, 

lower numbers of freestanding antenna masts were ordered than originally expected. 

Thanks to the superiority of its spun concrete technology, Pfleiderer managed to increase 

sales in France by nearly 50 percent, in what is seen as a highly competitive market for communications 

masts. In Poland, too, market shares in the telecommunications mast sector have 

been maintained. 


The market for Pfleiderer concrete, steel and fiberglass masts in Germany experienced 

stronger overall demand in the wind power sector, and thus for Pfleiderer’s wind towers. This 

demand pattern has been favored by public procurement at municipality and city level. This 

is largely independent of the economic cycle, with regard to demand for urban street lighting 

masts, for example. 

Due to high ordering levels of power transmission and lighting masts, as well as towers 

for wind converters, Pfleiderer Masts has more than three months’ orders constantly on the 

books. Several major projects for airports, power transmission lines and metropolitan railways 

ensure that business will continue brightly right up to the end of 2003. In the USA, we expect 

ordering to take on a pattern similar to the previous year. 

Prices 

Manufacturing costs in 2002 were partly affected by higher steel prices, while other production 

costs remained largely unchanged. Despite higher competitive pressure, sales prices were 

maintained at reasonable levels.

Coswig 

Dinkelsbühl 

Gernsbach 

Langen 

Leipzig 

Neumarkt 

Regensburg 

Constanti, Spain 

Lábatlan, Hungary 

Brasov, Rumania 

Currently, Pfleiderer supplies around 

one million concrete sleepers annually 

from six plants in Germany located 

at Neumarkt, Coswig, Langen and 

Gernsbach. Three plants outside 

Germany based in Spain (Travipos), 

Hungary (Labatlàn) and Rumania 

(Travertec) produce up to half a million 

sleepers annually in compliance 

with their own local safety and 

quality standards. Production of 

points sleepers amounts to around 

500,000 meters per year. 


Production Sites Infrastructure Technoloy, Europe 

Rail Traffic 


Pfleiderer has been producing concrete rail sleepers for metropolitan and intercity rail links as 

part of the European infrastructure since 1954. Pfleiderer’s most recent development is its 

Rheda Solid Track System – a non-ballast sleeper system for long-distance sections allowing 

speeds of up to 300 kph. This system is now used in the Erfurt to Halle/Leipzig link and the 

Cologne to Frankfurt section. Using over 180,000 patented special sleepers, the new highspeed 

link between Cologne and the Rhine/Main Airport stretches over 130 kilometers. Sleepers 

are produced in Coswig, near Dresden in Saxony, as well as in Neumarkt, and transported 

just-in-time to the relevant track section under construction. Further projects in the coming 

years are the Nuremberg to Ingolstadt and the Amsterdam to Brussels (HSL-Zuid) links. In the 

coming year, Pfleiderer will be involved in the engineering phase for these tracks, helping to set 

up the technical basis for the construction work to follow. Pfleiderer track technology is used 

in local and metropolitan railways, too. Pfleiderer track technology can be found in streetcar, 

underground and local track systems – for example, where track is renewed in Berlin, Hanover, 

Braunschweig, Bremen, Dresden and Cologne. Pfleiderer “ATD-G” track is the system of 

choice, especially in city areas, as it can be “greenscaped” with grass or sedum, improving the 

overall visual impression. This system has found favor with town-planners in Dresden, Berlin, 

Hanover and Zwickau, where track “greenscaping” is already in operation. 

Pfleiderer works closely with points manufacturers to ensure that sites are being reliably 

served and quality is maintained. In major projects, this involves serving the whole process 

beyond just simply supplying concrete sleepers. Our service includes planning and production,


107.7 

Sales Rail Traffic BU 


95.9 

02 01 

supply and logistics, right through to quality management. Where logistics or costs constrain 

that sleeper production is set up directly on site, Pfleiderer licenses local companies, coordinating 

and monitoring supply quality and reliability. Pfleiderer products have an outstanding international 

reputation thanks to our high quality standards and extensive know-how. 


Capacity utilization at the plants based in Germany is very high, and the situation in Pfleiderer’s 

foreign-based plants is similar. Customers tend to plan on a long-term basis when setting up 

high-speed rail links in Europe. This means that the Rail Traffic Business Unit is experiencing a 

constant level of activity, largely unaffected by economic cycles. A further factor for success 

is the current favorable political environment, which supports the creation of new inter-city rail 

links via “corridor projects”. 

Freak effects such as the floods in Germany during the summer of 2002 also led to increased 

demand. Pfleiderer was able to supply replacement sleepers quickly from inventories 

set aside for such contingencies. Some customers postponed orders until 2003, a fact which 

led to high ordering at the end of the year. Orders were further boosted by two major international 

contracts for points sleepers awarded by Serbia and by Singapore. 

Telecommunication 


In 2002, the Telecommunication Business Unit downscaled its services to current market 

conditions. Demand for transmitter stations, mobile and fixed networks was lower than usual. 

This led Pfleiderer to place more attention on technical innovations for rooftop transmitters 

and transmitter masts. One important extension to the product range resulting from this activity 

is a universal lightweight base unit for transmitter stations. More attention was also given 

to camouflage solutions using fiberglass as an answer to stricter urban planning requirements. 

Other special mast solutions have also been developed, such as “tree masts” and “lamp 

masts”, both made of spun concrete. 

More consolidation among competitors is likely if the remaining network providers further 

delay the UMTS network. In view of this consolidation pressure, resources and capacities 

have been adjusted when planning for 2003. Our objective is to downsize the organization, but 

maintain a presence through local project offices throughout Germany. This will enable us to 

continue offering optimum quality and customer service and give us the means to react quickly 

throughout the country when business picks up again. 


Due to the current market situation in the telecommunications industry, order volumes have 

fallen considerably, with order books becoming shorter. However, negotiations with mobile 

phone providers in Germany look promising, with a positive start to the new fiscal year expected, 

although ordering remains at a lower level overall.


Prices 

Prices obtained in the telecommunication sector remain subject to competitive pressure, 

forcing further cost cutting. The Telecommunication Business Unit is present throughout 

Germany, ensuring customer proximity and positioning it well for increasing its market share 

and expanding capacity utilization. 

However, order volumes in the Telecommunication Business Unit are considerably down 

on the previous year, with orders on the books running at around two months. 

Wind Power 

The wind converter market is profiting from German legislation, particularly the German 

Renewable Energies Act (EEG). Guaranteed payments for energy produced by wind power safeguards 

the operation of wind converters for the next 8 years. The number of wind converters 

installed in Germany increased in the first nine months of 2002 by 12 percent to 12,810 units. 

The rise in total capacity of installed units was even more dramatic, up by 20 percent to 

10,639 megawatts. However, offshore wind converters are now regarded as holding out the 

most promise for the future. Here, the Federal Government hopes to achieve an installed 

capacity of up to 500 megawatts by 2006 and 3,000 megawatts by 2010. 

Pfleiderer’s Wind Power Business Unit develops and sells fully equipped and operational 

wind converters. In 2001, several onshore units with capacities of between 600 kilowatt and 

1.5 megawatt went on stream. At the Coswig plant, assembly capacity for mast and tower production 

is being used to pre-assemble individual components. In 2002, Pfleiderer Wind Energy 

GmbH was awarded a contract to set up a wind park at Altenheerse comprising 14 smaller 600kilowatt 

converters. This project underlines Pfleiderer’s competence in the field, involving full 

project management from construction of paths and foundations down to the power cabling. 

Pfleiderer has vast experience and recognized competence in the construction of towers 

for wind converters. Now this knowledge has been merged with the development know-how of 

our companies Windtec GmbH and Multibrid GmbH. In Rendsburg, together with the engineering 

company Aerodyn, we are turning our innovative offshore MULTIBRID ® technology into 

reality – the first full systems solution for offshore wind converters. The first prototype wind 

converter using this technology will be erected in the autumn of 2003. Over the medium term, 

a partner is being sought for the wind operations, particularly for the offshore segment, 

who is capable of continuing these activities and can provide an appropriate development 

environment. 

Quality Management 

For many years, Pfleiderer Infrastructure Technology has operated and continually improved its 

quality management system. During the course of last year, this system has been extensively 

revised and adapted to current structures. A system is now in place that works uniformly for all 

the business units within the Infrastructure Technology Business Center, in particular coping 

with technically complicated plant in the Wind Power Business Unit which is otherwise difficult 

to audit. Only comprehensively tested materials from selected producers are approved for 

procurement in the “source list” of our integrated SAP R3 operating system.


All Pfleiderer concrete plants are certified according to DIN EN ISO 9001. Production is 

constantly monitored by a works quality assurance system. Product quality is checked through 

internal concrete testing, as well as for compliance to specifications and standards, and for 

conformity to the relevant certification requirements for pre-stressed spun concrete masts 

made of high-performance concrete. This quality assurance system is backed by independent 

monitoring through an accredited third party organization. All of Pfleiderer’s domestic sleeper 

plants have been awarded Q1 supplier status by Deutsche Bahn. 

Considerable advances have been made in the quality assurance that applies to the 

Telecommunication Business Unit, greatly increasing customer satisfaction. Renovation work 

from earlier years has since been successfully concluded. The quality standards achieved 

for delivered spun concrete masts have reached a new level, and are now an important sales 

argument for Pfleiderer products, including those produced in Poland and France. 

Sales/Results 

2002 2001 


Sales 335.5 323.1 

EBITDA 45.6 47.9 

EBIT 36.0 33.1 

In fiscal 2002, the Infrastructure Technology Business Center increased sales by 3.8 percent to 

335.5 million euros (2001: 323.1 million euros). Around 40 percent of sales were made outside 

Germany. The Masts/USA Business Unit is the largest contributor to sales in the Business 

Center, accounting for 171.7 million euros, followed by Rail Traffic at 107.7 million euros. 

Earnings before interest, taxes, depreciation and amortization (EBITDA) were –4.8 percent 

lower, however, at 45.6 million euros (2001: 47.9 million euros). Earnings before interest and 

taxes (EBIT) recorded growth of 8.8 percent to 36.0 million euros (2001: 33.1 million euros). 

The Infrastructure Technology Business Center achieved a ROCE of 28.3 percent. 

The Masts/USA Business Unit recorded an increase of 6 percent in sales to 171.7 million 

euros. Increased sales of spun concrete masts in the USA played an important part here. 

The Rail Traffic Business Unit developed very pleasingly in 2002. Sales increased by 

12 percent to 107.7 million euros. 

The Telecommunication Business Unit is suffering from a general weakness in the market. 

Economic uncertainties surrounding certain major customers have led us to delay order 

acceptance in order to avoid the risk of downtime.


Procurement 

Pfleiderer Infrastructure Technology’s procurement strategy is based on the bundling of its 

raw material requirements in order to gain economies of size, even though plants are present 

on international markets. Where possible, medium and long-term agreements have been made 

with suppliers to ensure supply chains for production, and to cut back on unnecessary inventories, 

thus releasing more cash into the business. 

As far as series production of sleepers is concerned, ordering has been systemized. This 

ensures that customers can be supplied as needed while inventories are held for only a few 

days. Procurement of raw materials for the production of cement has been entirely outsourced 

to the suppliers themselves, with the result that Pfleiderer now holds inventories of less than 

one working day. 

Raw materials needed for all products in the Infrastructure Technology Business Center 

are secure apart from steel band for the production steel masts. Since mid-2002, a restrictive 

price and quantity policy has been in operation in the steel market, resulting in higher prices 

and longer delivery times. However, this has not resulted in delivery bottlenecks for Pfleiderer, 

thanks to medium-term supply agreements. A similar development can be observed for sheet 

steel and pre-tensioning steel wire. Here merging international groups has led to a sustained 

price policy. 

As far as concrete products such as sleepers and spun concrete masts are concerned, 

cement prices have fallen over the medium term in Germany due to the crisis in the construction 

industry. 

insulation technology 

In keeping with Pfleiderer’s new corporate strategy, its Insulation Technology operations were 

sold to the Spanish building materials producer Uralita S.A., Madrid with effect from November 

30, 2002. The Spanish company took over all Pfleiderer Insulation Technology plants and operations, 

including all employees and the new production site under construction in Serpuchov, 

near Moscow. Part of the deal with Uralita S.A. included the sale of the Pfleiderer affiliate 

Mehr+Held GmbH, a development and construction company specialized in the construction 

of production plants. Operations of the former Pfleiderer Insulation Technology are now continuing 

under URSA Deutschland GmbH. 

Pfleiderer AG reported sales of 197.8 million euros from its Insulation Technology operations 

in fiscal 2001, with earnings before interest and taxes (EBIT) coming to 17.6 million euros. 

In the European market, Pfleiderer produced around 11 million m3 of URSA ® brand glass-fiber 

insulation material in seven sites at Delitzsch, Wesel, Desselgem (Belgium), Dabrowa Gornicza 

(Poland), Novo Mesto (Slovenia), Salgotarjan (Hungary) and Tschudowo (Russian Federation) 

and employed 1,474 people.


Sales 

The European market in which Pfleiderer was active with URSA ® brand insulation material in 

2002 has a total annual volume of around 70 million m3 . With a sales volume of around 

11.7 million m3 , the URSA ® brand has a market share of 17 percent in these countries. The 

biggest share of the market for the URSA ® brand is in Eastern Europe, where it holds around 

20 percent. This is an increase of around 1 percent over 2001. Pfleiderer Insulation Technology’s 

share of the domestic market in Germany is largely stable, at nearly 16 percent. 

Germany is the most important market for the Business Unit Central (Switzerland, Germany, 

Denmark), accounting for sales of URSA ® brand products of 2.7 million m3 . However, 

sales were around 10 percent down on the previous year in this market due to the recession in 

the construction industry. 

The Business Unit West (France, Benelux, Netherlands) experienced pleasing growth in 

operations. Sales in France, the biggest western European market for URSA ® brand products, 

grew by around 13 percent in 2002 over the previous year. 

In the markets of the Business Unit East (including Russia, Poland, Hungary, Rumania, 

Slovenia, Austria, and Italy) sales were up by around 24 percent in 2002 on the previous year. 

Utilization of production capacity in Pfleiderer Insulation Technology was good and as 

scheduled in 2002. In the first half of 2002, major repairs to glass smelting furnaces, necessary 

every four to five years, were carried out at the Tschudowo (Russia) and Salgotarjan 

(Hungary) plants. Production downtime was used in both insulation plants to extend capacities. 

Prices 

Average prices for insulation material per m3 fluctuated greatly in Europe. This is largely 

due to the different composition of the product ranges on offer. In western Europe, an average 

16.24 euros per m3 was recorded, while the average price in central Europe came to 

25.73 euros. In eastern Europe, the average price obtained was 16.21 euros per m3 . 

Sales/Results 

The Consolidated Financial Statements in this Report show results for the Insulation Technology 

Business Center up to November 30, 2002 under “Discontinued operations”, as this business 

center was sold with effect from November 30, 2002. Up to the reporting cutoff date, the 

Insulation Technology Business Center had total sales of 207.5 million euros. Earnings before 

interest, taxes, depreciation and amortization (EBITDA) came to 30.2 million euros for the first 

eleven months of 2002, while earnings before interest and taxes (EBIT) came to 19.6 million 

euros (excluding the suspension of amortization in accordance with US GAAP).


doors and windows 

Pfleiderer’s new corporate strategy also meant the disposal of its Doors and Windows Business 

Center operations, which were sold off in fiscal 2002. Disposal of the Windows Business Unit 

took the form of a management buy-out effective as of June 2002. Operations at the Rietberg- 

Mastholte in Westphalia, Germany, previously known as Pfleiderer Fenster GmbH & Co. KG, 

were taken over by a management team. 

The Doors Business Unit operations were sold to the Danish company Vest-Wood A/S 

with effect from October 31, 2002. This company took over Pfleiderer Türen GmbH & Co. KG 

with its German plants in Oettingen in Bavaria and Mittweida in Saxony, production in Lenti in 

Hungary and the Wirus Servicegesellschaft mbH with its offices in Gütersloh in Westphalia, 

Germany. 

The Doors and Windows Business Center employed around 1,442 people (as of December 

31, 2001) with sales in 2001 of 149.4 million euros, and earnings before interest and taxes 

(EBIT) of –11.5 million euros. Pfleiderer produced its brands Moralt ® , Svedex ® and Wirus ® 

for the German market at Oettingen, Mittweida and Lenti. In Gütersloh, Pfleiderer produced 

Wirus ® brand PVC and aluminum windows and doors. 

Sales 

Sales in the Doors and Windows Business Center had already been hit by the slump in the 

construction market during previous years, affecting all building and construction suppliers. 

Low order books due to seasonal fluctuations in the summer months of 2002 were 

responsible for some sections of the frame production plant in Mittweida having to work short 

time from August to October. In the production plants at Oettingen and Lenti in Hungary, lower 

capacity uptake from the market was offset by flexible production shifts. 

Noticeable costs were incurred from restructuring during the first months of the year, 

as well as the integration of Svedex activities. These negative effects were partly compensated 

by cost reductions achieved in materials, manufacturing and logistics. 

Sales/Results 

The Consolidated Financial Statements in this Report show results for the Doors and Windows 

Business Center/Doors Business Unit up to October 31, 2002 under “Discontinued operations”, 

as this Business Center was sold with effect from October 31, 2002. Up to the reporting 

cutoff date, the Doors and Windows Business Center/Doors Business Unit had total sales 

of 115.0 million euros. Earnings before interest, taxes, depreciation and amortization (EBITDA) 

came to 1.4 million for the first ten months of 2002, while earnings before interest and taxes 

(EBIT) came to -4.1 million euros (excluding the suspension of amortization in accordance 

US GAAP).


1.2 

1.7 

02 01 

Research and development 

expenses, continued operations 


research and development 

Pfleiderer Group’s research and development activities concentrate mainly on the optimization 

of its introduced products, production processes and costs. The Group employed 96 quality 

managers, laboratory technicians, product designers and applications technicians in its Wood- 

Based Panels and Infrastructure Technology Business Centers in 2002. Group expenditure on 

research and development came to around 1.2 million euros in 2002 (2001: 1.7 million euros). 


Pfleiderer employs 53 people in its Wood-Based Panels Business Center to manage recycled 

wood, optimize the value added chain, develop new surfaces and study thermohydrolysis. 

Surface treatment of boards and panels is playing an increasingly significant role because new 

decors and surfaces are constantly in demand by the kitchen furniture industry. As a result, 

Pfleiderer is constantly expanding its product portfolio. This involves developing and testing 

new surfaces such as fine aluminum metallic surfaces, hologram three-dimension effects, or 

non-slip surfaces – all important in terms of product characteristics and surface resistance. 

Currently, development of Bio-MDF based on adhesives using a purely enzyme process 

is under way. This involves replacing conventional synthetic resin adhesives using carbamide 

and formaldehyde with a biological adhesive process. Here, too, high technical standards for 

product characteristics must be met with regard to color, stability, resistance to moisture and 

so on. Thermo-hydrolytic breakdown for the recycling of used woods is another development 

still at the trial stage. Breaking downing and separating old particleboard into its component 

chips and chemicals would make particleboard even more attractive as an environmentally 

friendly product. 


Due to the high technological demands placed on its products, the Infrastructure Technology 

Business Center is the most intensive area of research within the Pfleiderer Group. The products 

in its business units are protected by 72 patents and trademarks, as well as 136 applications 

pending for patents. 

In the Rail Traffic Business Unit, research and development work is concentrating on 

concrete and asphalt solid track systems for high-speed rail links. Continuous improvements 

made to high-speed trains mean that developments in rail track must keep pace, particularly 

with regard to substructures. Pfleiderer is involved in essential development work in this 

field, the results of which are being applied throughout Europe. A further area of significant 

development is that of “green track” for streetcar tracks. Not only does this help reduce noise 

levels, it is also an increasingly important element in town planning.

management report research and development pfleiderer ag 41 

Hybrid masts for wind converters were the focal point of development work in the 

Masts/USA Business Unit in 2002. Increasing demand for ever higher towers has taken conventional 

steel designs to their limits. The Masts Business Unit combines the advantages 

of a cement construction with steel, enabling production of concrete towers of more than 

100 meters. In the USA, too, hybrid towers are being used successfully as power transmission 

masts. Other areas of development relate to applications found in airports, where plastic 

masts are used in order to comply with special requirements relating to tensile strength and 

microwave reflection. 

In the Infrastructure Technology Business Center, the Wind Power Business Unit is carrying 

out important development work with its offshore MULTIBRID ® technology. In fiscal 2002, 

around 6.7 million euros were spent on developing this, the first systems solution for offshore 

turnkey wind converters. As the Pfleiderer Group is looking for a partner over the medium term 

with whom to develop its wind converter activities, particularly in the offshore segment, these 

development costs are shown under “Discontinued operations”. 

Insulation Technology 

Research and development activities in the Insulation Technology Business Center in 2002 

were directed at further optimizing existing product characteristics. In a joint project carried 

out with the Fraunhofer Gesellschaft, glass-fiber production was analyzed. A better understanding 

of the processes involved could enable lower raw fiber density, achieving savings in terms 

of the total quantity of material used. Other research areas included the virtual design of 

open-pore materials and the development of odorless and emission-free inorganic adhesives. 

This latter development would give insulation materials a longer life-span and enable them to 

be recycled.


44.7 

61.1 

02 01 

Capital Expenditure, continued 

operations 


capital expenditure 

Capital expenditure by the Pfleiderer Group focuses on replacement spending to maintain 

plant, as well as on the construction of new production sites or the introduction of new 

products. An internal yield guideline lays down the conditions that apply to new capital expenditure, 

ensuring that adequate interest on capital is achieved. In 2002, the Pfleiderer Group 

had total capital expenditure of 44.7 million euros (2001: 61.1 million euros). 


Capital expenditure by the Wood-Based Panels Business Center in 2002 came to 19 million 

euros. Apart from essential spending on replacements, smaller rationalization measures were 

carried out to maintain this segment’s cost leadership in the German market. 

At the Polish production site in Prospan, production of post-forming elements was 

started in December, rounding off the production portfolio. Apart from that, a new multi-format 

contact press for the surfacing of particleboard and MDF board was purchased in order to 

enable further growth of the business center in this profitable market segment. 


Capital expenditure in the Infrastructure Technology Business Center came to around 18.0 million 

euros in 2002. Spending concentrated mainly on the construction of a new concrete mast 

plant in Barstow in California (around 7.4 million euros). Apart from that, production facilities 

for rail and points sleepers were extended at Travipos in Spain. 


Pfleiderer invested a total of approx. 17.2 million euros in the insulation technology segment 

in 2002. Most of this was directed at expanding production capacity in Russia. In order to 

strengthen our market presence in Russia and eastern Europe, work started on the construction 

of a new plant in Serpuchov near Moscow in 2001. Construction of the factory will now 

be completed by its new owner, Uralita S.A. The insulation plant is expected to start operations 

in the first half of 2003.

management report capital expenditure/environmental report pfleiderer ag 43 

Doors and Windows 

Capital expenditure during fiscal 2002 in the Doors and Windows Business Center mainly 

focused on replacements needed to maintain production plant, as well as for the acquisition of 

the Svedex brand. The volume of expenditure in this Business Center came to 5.6 million euros 

in fiscal 2002. 

environmental report 

Environmental Protection Policy and Organization 

Air and noise emissions in all of Pfleiderer’s production plants are strictly monitored for compliance 

with the Federal Emissions Act. This reflects the Pfleiderer Group’s strong commitment 

to protecting the environment. Pfleiderer also recognizes the importance of dialogue about 

environmental matters with the general public. 

Pfleiderer’s Executive Board has drafted a corporate environmental protection policy 

and set up an organization to this end. This commitment takes the Group well beyond statutory 

requirements. For example, Pfleiderer nominated an environmental protection manager for 

each of its production sites, irrespective of whether this is legally required or not. 

The Pfleiderer Group believes that all environmental media such as air or water are equally 

important. It is the duty of the environmental protection manager at each of the Group’s 

production sites to ensure that water, soil and air are each given equal protection. This policy 

is backed up by a centralized environmental protection office which reports directly to the 

Executive Board and which coordinates, advises and supervises the work of the environmental 

protection managers. Meetings on the environment are held several times a year, the latest 

legislation discussed, and site reports presented by individual environmental protection managers. 

The aim of these meetings is to create synergies that are both ecologically and economically 

meaningful. 

Environmental Protection Activities 

Pfleiderer places considerable importance on maintaining a dialog with the general public 

about its environmental activities. For example, regular meetings with the public are organized 

at all of the Group’s sites, ensuring a better exchange of information in both directions – and 

thus better understanding. This can even lead to parameters relating to expansion plans being 

jointly drafted with the public. In Neumarkt, this type of expertise is used when applying to 

the local authority for capacity increases for the power generation plant. This ensures that the 

public is given, and can discuss, all the relevant details well before the interpretation stage.


Events for the general public held at the Gütersloh plant reported on the successful renovation 

of the particleboard plant. In Rheda, similar events have been used to inform the public 

about the construction of a heating plant as part of expansion of capacity. In the Thermopal 

plant in Leutkirch, several information events for the public have been held, providing information 

about planned capital expenditure on a heating plant. 

The “Eco Profit” project, in which the Pfleiderer Group took part together with other 

Gütersloh companies and the City of Gütersloh, aims to create measures that will reduce environmental 

pollution and save costs at the same time. Apart from the ecological and economic 

advantages involved, the companies taking part in this project in Gütersloh want to clearly 

demonstrate to the public their commitment to the environment, at the same time documenting 

that they are complying fully with statutory requirements. 

Setting up a hazardous substances catalogue and waste accounts, as well as involving 

employees, all helped determine the environmental situation at the beginning of the project. All 

employees had an opportunity to play an active part and make suggestions for improvements 

via an “eco hotline” especially set up for this purpose. 

Our “Eco Profit” project resulted in six-digit savings in terms of energy and materials. 

Glue and energy consumption was reduced by moving over to high-pressure gluing. Optimizing 

compressed air lines resulted in further reductions in energy. By redesigning the ash site, water 

consumption and disposal costs were also lowered. The purchasing of additional containers is 

expected to increase the amount of recycling possible from waste. 

Another important area of environmental protection where the Pfleiderer Group is active 

relates to current legislation at the national and international level. The Pfleiderer Group sees 

this as an opportunity to communicate the high environmental standards of its production sites 

to all relevant environmental agencies, actively contributing to further development of environmental 

technology. We are also aiming at positively influencing the way in which legislation is 

applied in industry, while maintaining current high standards. Concrete examples of this are 

our active involvement in drafting the Biomass Ordinance and in the current discussions relating 

to its amendment, as well as to amendments to the Technical Standards for Air Quality 

and the Used Wood Ordinance. 

Disposal of Historic Waste, Dismantling Old Plant 

Historic waste is likely to exist at plants where wood impregnation was carried out in earlier 

years, for example, on railway sleepers. All relevant locations have been extremely thoroughly 

investigated and are under constant observation, for example, by testing the ground water. 

Where necessary, recycling of ground water is undertaken. In the fiscal year that has just ended, 

ground water recovery continued at Neumarkt as in previous years. In 2002, work started 

on the dismantling of the particleboard plant in Peiting which was closed in 2001.

management report environmental report pfleiderer ag 45 

Product-Related Environment Protection, Low-Impact Production 

The production of particleboard alone means putting environmental protection into practice. 

Weak wood and production residues from other industries which are otherwise unusable are 

processed into wood-based panels, themselves an active carbon dioxide sink. 

In accordance with legal requirements, Pfleiderer makes hardly any use of fossil fuels at 

its plants, preferring to use biomass as a substitute. In our plants at Neumarkt, Gütersloh and 

Rheda, co-generation power plants are in operation. In Rheda, approval has also been given for 

a new power plant, and in Leutkirch an application for approval will be made at the beginning 

of 2003. 

In all its plants, the Company has committed itself to achieving emission levels below 

statutory levels set out by the 17th German Federal Pollution Control Ordinance (BimSchV). 

The continuous monitoring of carbon dioxide emissions, as well as publication of emission 

levels on the Internet has also created higher transparency. 

Capital Expenditure on Environmental Protection Activities 

A major investment in environmental protection during the reporting period was the construction 

of a new 98 meter high exhaust air chimney at Rheda. Around 1.0 million euros were 

scheduled as expenditure on the new chimney, which will result in considerable further reduction 

of odor emissions in the area surrounding the plant. The new chimney will be used to 

expel dryer air, as well as waste air from the power generation plant and presses. 

Type and Extent of Environmental Risks 

No environmental risks are expected with regard to historic waste, as extensive studies have 

been carried out at all sites to assess any such hazard. The introduction of the new Technical 

Standards for Air Quality (TA Luft) does not harbor any additional risks which would call for 

additional unscheduled capital expenditure. Our sites either already comply with the Technical 

Standards, or renovation measures have been planned which will result in compliance with 

the amended Technical Standards (for example, in Leutkirch, replacing open-air stockpiles of 

sawdust with silo storage).


organization and personnel 

Organization 

The organizational structure of the Pfleiderer Group underwent significant changes in 2002, 

following the adoption of its new corporate strategy. This has involved focusing on two core 

Business Centers, Wood-Based Panels and Infrastructure Technology. The two other Business 

Centers closely associated with the construction sector – Insulation Technology and Doors 

and Windows – have been divested. In future, the Group’s remaining core organization, which 

is divided into a holding company and two business centers, will be more closely orientated 

toward functional management structures. Central service activities for internal and external 

customers are currently bundled in Pfleiderer Service GmbH. 

Business Center 


BU Engineered 

Wood West 

BU Engineered 

Wood East 

BU Duropal 

BU Eltec 

BU Thermopal 

BU Tipla 

pfleiderer ag 

Business Center 


BU USA 

BU 

Telecommunication 

BU Rail Traffic 

BU Masts 

BU 

Water/Extrusion 

BU Wind 

Pfleiderer 

Service GmbH 

as of: Dec. 31, 2002 

The new corporate strategy has also resulted in changes to the legal composition of the 

Pfleiderer Group. In divesting the Doors and Windows Business Center, all companies in the 

doors and windows operations were sold, except for one administration company. Sale of the 

Company’s insulation technology operations resulted in divesting all shares in its foreign insulation 

companies (including shares in a German affiliate). An exact breakdown of the Company’s 

legal holdings is shown in the section listing the companies included in consolidation.

management report organization and personnel/personnel report pfleiderer ag 47 

personnel report – facts and figures 

2002 2001 

Germany Foreign Total Germany Foreign Total 

Area 

AG/Corporate Units 381) 0 381) 421) 0 421) Service Units/Freight Forwarding 258 8 266 258 10 268 

BC Wood-Based Panels 2,938 970 3,908 2,990 1,052 4,042 

BC Infrastructure Technology 1,063 953 2,016 1,082 926 2,008 

Subtotal Core Business 4,297 1,931 6,228 4,372 1,988 6,360 

Sold discontinued operations 

BC Doors and Windows 1,110 2) 217 2) 1,327 1,203 239 1,442 

BC Insulation Technology 396 3) 1,078 3) 1,474 417 1,013 1,430 

Subtotal 1,506 1,295 2,801 1,620 1,252 2,872 

Total as of Dec. 31 4,297 1,931 6,228 5,992 3,240 9,232 

3,908 

2,016 

02 01 

■ AG/Corporate Units 

■ Service Units/Freight Forwarding 

■ BC Wood-Based Panels 

■ BC Infrastructure Technology 

Employees 

266 

38 

6,228 

6,360 

42 

268 

4,042 

2,008 

Figures also include company officers and trainees as of Dec. 31, 2002; 

1) includes 14 (2002), and 4 (2001) trainees 2) as of Oct. 31, 2002 3) as of Nov. 30, 2002 

Including company officers, the Pfleiderer Group had a total of 6,228 employees as of December 

31, 2002 (2001: 9,232). Of these, 1,853 were salaried employees (includes officers) and 

4,120 were industrial workers. The new direction taken by the Group – in particular disposal of 

its Business Centers Doors and Windows and Insulation Technology – has led to an overall 

reduction of around 2,800 jobs. 

Pfleiderer has 24 training professions at 12 training locations. As of December 31, 2002, 

Pfleiderer had 146 trainees and 109 apprentices, i.e. a total of 255 Group-wide. 

At present, 80 employees are in pre-retirement part-time work models. 113 employees 

have celebrated their 25th anniversary with the Company and 12 employees their 40th anniversary. 

Following extensive restructuring of the Group over the last few years, the new corporate 

strategy has enabled Pfleiderer to develop new forms of human resources management that 

will carry it into the future.


1.04 

0.9 

02 01 

Personnel development expenses 


Stock Option Scheme 

Following its introduction in 2001, a stock option scheme was open again to selected senior 

management in 2002 as part of the stock appreciation rights scheme set up with the Group’s 

Long-Term Incentive Plan in 2000. 

As in 2002 and 2001, the scheme requires a not inconsiderable personal investment 

in Pfleiderer shares as a starting commitment. The exercise price in the premium price option 

model is at least 110 percent of the base price. Despite the difficult economic situation, the 

level of participation is pleasingly high and is a demonstration of senior management’s confidence 

in the Group. 

As announced in 2001, the variable compensation system that was initially introduced for 

senior management, has now been extended to all employees outside the collective bargaining 

process. The Pfleiderer Balanced Scorecard has created a foundation for these employees to 

be paid according to personal performance and contribution to the value increase of their business 

centers. 

Annual performance assessments held between employees and their superiors also serve 

to intensify dialogue and are an integral part of Pfleiderer AG’s management guidelines. 

Personnel Development on the Business Campus 

The Pfleiderer Business Campus bundles all management development activities and courses 

in the Pfleiderer Group. Apart from training courses for new employees and trainees, advanced 

training courses are on offer. The Campus is a place of learning and development within the 

organization. As such, it appeals to all employees within the Group and acts as a motor for 

corporate innovation and cultural change. Personnel development activities in 2002 took up a 

budget of around one million euros (2001: 0.9 million euros). 

Management Guidelines 

Pfleiderer’s Management Guidelines are a focal point in the personnel development process. 

The Guidelines set out and bring together ideals in terms of personal attributes and competencies 

expected from corporate management. As such, the Guidelines are an essential part of 

Pfleiderer’s management concept, expressing the Company’s desire to achieve a leadership 

culture. 

The Management Guidelines are directly beneficial to Pfleiderer AG and its senior 

management, as they harness and direct leadership potential within the Company. As well as 

representing a benchmark for the successful development of managers, the Guidelines act as 

a selection instrument when filling senior positions and as orientation to all senior managers. 

Finally, the Guidelines are an important instrument in developing a leadership culture within the 

Company.

PEPP Potential 

Recognition 

management report personnel report pfleiderer ag 49 

management 

guidelines 

Junior Consultants Employee 

Assessment 

Qualification 

Schemes 

Job Allocation 

Assessment Selection Competencies Leadership college Internal 

Performance 

Guideline 

Short listing 

Motivation 

Promotion stage 

benchmarking 

General 

Ability 


management 

External 

Personality 

Passony guidelines 

Self-management 

Open training 

Guideline 

Counseling 

schemes 

benchmarking 

Coaching book 

Potential assessment 

Management devel- 

Short listing 

PE Database 

opment program 


Short listing 

Counseling 

Coaching book 

Senior management 

1. Internal Junior Consulting 

In 2002, 14 participants for the Pfleiderer Junior Consultant Program were selected on the basis 

of the Management Guidelines. These participants will pass through various training and 

development stages using the Guidelines to benchmark their progress. 

2. Employee Assessment 

Commencing at the end of 2001 and the start of 2002, the abilities of managers at Job Level 1 

and 2 were assessed in dialogue with their superiors. The objective was to determine how far 

managers’ abilities corresponded to the Management Guidelines. The results provided a basis 

for self-management for those assessed, as well as for counseling and development measures 

where required. 

3. Potential Recognition Scheme at Pfleiderer 

The abilities and personalities of selected managers at Job Level 3 were assessed within the 

framework of the Management Guidelines as part of the Personnel Potential Recognition 

Scheme (PEPP). The starting point is the HR principle of promoting internally before drawing on 

outside sources. The aim of the scheme is to identify and win over managers with the potential 

for higher responsibility and duties within the Company.


Personnel development seminars run by qualified experts are used to assess suitability 

for higher responsibility. After all assessments have been completed, managers taking part are 

given feedback about the results of the assessment. Depending on the results, managers are 

then short-listed for promotion. Additional promotion measures are agreed with all managers 

assessed. 

4. Selection for Senior Management 

When selecting managers for senior executive functions, candidates are chosen according to 

how they benchmark against the Management Guidelines, and whether they fulfill the particular 

requirements of the job. Provided they are suitable, candidates who have been short-listed are 

given preference. 

5. Qualification Scheme 

Multi-stage qualification schemes based on the Management Guidelines have been run since 

autumn 2000. These are bundled in the Pfleiderer Management College which deals with 

human resources management, as well as the Pfleiderer General Management Scheme which 

covers such topics as “business administration of business units and business processes”. In 

2002, more than 250 managers took part in these seminars. 

6. PRIMA: Managing Projects Intelligently 

Pfleiderer’s Project Management qualification drive started in 2002 is designed to enable 

managers and employees to work more effectively with projects. Apart from this, we are 

establishing and developing a group of highly qualified project leaders for various types of 

projects. We are also developing, introducing and using instruments suitable for a wide range 

of projects. 

Project management is more than just a method of working – it is a special management 

form, and thus an integral part of the future management culture, enabling us to react flexibly 

to problems as they arise. 

Well-trained project managers are capable of dealing even more effectively and intelligently 

with cross-functional tasks. At the same time, deadlines and cost targets are met more 

easily, also through the intelligent use of external service providers. While these skills are being 

developed, we are reducing external consultancy services and making much better use of 

the Company’s internal know-how. In other words, we are moving Pfleiderer forward towards 

its place in the knowledge-based society. 

During the period under review, we held information events for management and project 

staff, analyzed current project management and conceived training and consultancy courses.

management report personnel report pfleiderer ag 51 

Cultural Activities and Social Involvement 

In Germany, Pfleiderer is involved regionally in the social and cultural life of the towns and 

cities where its production sites are located. The promotion of city marketing, smaller festivals 

or sporting events – these all make a location more attractive, as well as being to Pfleiderer’s 

advantage as an employer in the region. It is particularly important that industry provides 

support, especially for smaller towns and cities that are outside the catchment area of major 

cities offering massive training and cultural opportunities. For example, in 2002 Pfleiderer 

provided support to a children’s home in the region, and supported the “Bayern Rundfahrt”, 

a cycling race around Bavaria, a local event which has taken place in Neumarkt for the last 

23 years. 

In what has become a tradition over the last seven years, in 2002 Pfleiderer again sponsored 

the Oberpfalz Regional Competition “Jugend forscht” – a competition where schoolchildren 

throughout Germany compete for the most innovative research idea. Over the last few 

years, Pfleiderer has pioneered the idea of opening up the competition to company trainees. 

The result of this is “Azubi forscht”, with four separate Pfleiderer trainee teams taking part in 

2002, two of which won awards. One of the teams went on the federal competitions to win the 

Special Award by the Federal of the Metal-Working Industry, awarded by the Federal President. 

Pfleiderer contributes around 35,000 euros annually to the “Jugend forscht” competition. The 

youngest winners of “Jugend forscht” are given an opportunity to come to the Pfleiderer Training 

Camp. This is an opportunity for young people to see what working life looks like and where 

they can try to put their research ideas into practice. The Company also cooperates with local 

schools in helping school-leavers start working life. 

Pfleiderer is also involved in the war against drug abuse. Here we have set up and 

supported working groups, as well as holding information events dealing with the dangers of 

addition.


risk report 

The risks that the Pfleiderer Group is facing have changed considerably as a result of divesting 

the Insulation Technology and Doors and Windows Business Centers. Income from the sale of 

these operations has given the Group considerable financial room to reduce corporate debt, as 

well as to make further investments. In view of these positive effects, the Company accepted 

book losses resulting from the sale of these business centers. The thinking behind this is 

based on securing the Company’s long-term success, which is why the Pfleiderer Group decided 

it was more important to detach itself from the German construction sector. This is coupled 

to extending cost advantages to the Wood-Based Panels Business Center while building on the 

Company’s international activities and gaining new market potentials. Concentrating on our 

core activities in Wood-Based Panels and Infrastructure Technology, which operate in different 

markets, as well as our planed expansion of foreign operations, has spread risk more evenly 

throughout the Group. 

General Risk Situation and Individual Risk Scenarios 

Overall Economic Risk and Sector Risk 

Germany provided the main source of income for the Group during the reporting period. This 

inevitably makes Pfleiderer more dependent on its domestic economy, with all its forecast 

weakness. However, this was fully taken into account when planning activities, and so does not 

represent a specific risk. There are also no apparent economic risks relating to markets abroad 

that could have a major effect on operating results. 

The new organization, and further slimming down of overhead structures, has enabled 

Pfleiderer to create the prerequisite for reacting flexibly and efficiently to those labor risks 

which cannot be entirely discounted. 

The Rail Traffic Business Unit in the Infrastructure Technology Business Centeris participating 

in the construction of new rail track by the Deutsche Bahn, as well as in its modernization 

projects. Apart from that, Pfleiderer is involved in major international projects to extend 

high-speed links. After expiry of the master agreement at the end of 2003, the industry 

expects some pressure on prices and conditions to emerge over the medium term. Further 

rationalization and the creation of production sites close to demand are one way of counteracting 

poorer results. Seen internationally, this business segment is increasingly changing from 

a supply operation to project work. While this presents an opportunity for higher earnings, 

it does mean that contractors have to face additional demands regarding technical planning, 

order processing and logistics. Pfleiderer is preparing itself for this through changes to its 

organization and personnel structures. Large construction companies wanting to enter the rail 

traffic business, as expected some years ago, would first have to create efficient structures 

that could compete against current suppliers, with their years of experience, flexibility and lean 

organizations. 

In the masts business, Pfleiderer has adjusted to reduced ordering from mobile phone 

operators compared to previous years. No further risks, especially with regard to capacity 

utilization, are identified here. Nor are there any serious risks or capacity problems seen for 

our plants in the USA which produce concrete and fiberglass masts. Should the market for

management report risk report pfleiderer ag 53 

power transmission masts become saturated, other application areas are open. Pfleiderer is 

not facing any political or currency risks either with its production in the USA. Product liability 

risks, which must always be taken seriously in the USA, are seen as very slight, thanks to a 

quality assurance program. 

In its Wind Power Business Unit, Pfleiderer is involved with the development and production 

of onshore and offshore wind converters. One risk that could hinder us in achieving sales 

targets is the availability of sites for wind parks in the onshore segment. In earnings terms, 

stand-alone units are no longer commercially attractive. No sales of offshore converters have 

been planned for 2003 yet, with development work still to be completed by all competitors. 

The German law which allows current to be fed into the power grid (“Stromeinspeisungsgesetz”) 

is important for the industry, and will remain in force. 

In the Wood-Based Panels Business Center, deviations from planned sales and income 

levels in 2003 cannot be excluded. This is particularly due to unsatisfactory order books in the 

furniture industry – with the danger that even big, well-known producers might end up leaving 

the market. This, and production overcapacities in the particleboard industry, are having a 

negative effect on prices. The objective of our new marketing and logistics concept, therefore, 

is to improve earnings and to cut costs. 

Currency exchange risks, which have a minimum effect on sales and earnings, only exist 

for two particleboard plants in Poland. 

Increasing interest rates, which could have a negative effect on ordering, are neither 

expected in Germany nor abroad. 

No amendments to laws, ordinances or tax regulations have been made or are pending 

that could have a noticeable effect on the situation or development of the Company, its 

segments or markets. No known fundamental technological changes exist with regard to the 

use or manufacture of products by the Company. No risks from natural catastrophes or from 

political changes have been discerned for the locations in Germany or abroad , nor is any 

specific danger seen with regard to civil disorder or targeted sabotage. 

Operating Risks 

Sales Risks 

The chance of a new, powerful competitor entering the market is considered slight and would 

only bear on the Rail Traffic Business Unit. Pfleiderer sees no signs of any further concentration 

among its customers nor, consequently, of any associated risks. 

On the other hand, the danger of previously potent customers becoming bankrupt cannot 

be excluded in any of our operating segments. In order to take this into account, and in accordance 

with our corporate guidelines, risk from customers defaulting on payment has been 

hedged by taking out credit insurance cover. However, it should be remembered that insurance 

does contain excess coverage clauses which the Company would have to bear when claiming. 

Risk relating to losses from a mobile phone network provider has now ceased as payments 

have since been received.


While large volumes are sold to some customers, no business unit is critically dependent 

on any one customer. The dependency of the plants in Poland on furniture manufacturers with 

strong sales in Germany will be reduced in future by expanding exports to neighboring eastern 

European countries. 

Increased activities in the wind converter area, in particular supplying wind parks, entails 

components being produced in larger numbers. This naturally results in a corresponding inventory 

risk. 

Research and Development Risks 

Risks relating to potential infringement of third-party patent rights, which led last year to a 

patents rights conflict in the insulation technology area, are no longer apparent. Proceedings 

were concluded by way of an out-of-court settlement. This means that no future expenses 

will be incurred here. 

Risks relating to technology or production processes are not envisaged, as Pfleiderer is 

operating state-of-the-art equipment at least. 

Production and Procurement Risks 

The Company manufactures its products using continually running plants or multi-shift 

operations. This means that production is largely dependent on the availability of plant and materials. 

The risk of breakdowns and interruptions occurring is kept to a minimum by operating 

a maintenance management system and the existence of reserve equipment and parts. 

Wood processing involving chippings and dust coated with glue dried at high temperature 

carries a danger of explosion or fire, a risk that cannot be entirely ruled out. Together with its 

insurers, Pfleiderer has taken all the necessary technical and organizational precautions, as 

well as set up contingency and catastrophe plans, should such an incident occur. Fire drills are 

carried out regularly with the Company’s own fire service, together with municipal firefighting 

units. Pfleiderer has largely reduced the danger of customers changing supplier during prolonged 

downtimes by organizing an emergency system of replacement supplies from other 

plants within the Group. 

Major damage to structures, machinery and plant are covered by insurance, covering 

both direct damage by fire, as well as losses incurred by production downtime. The considerably 

higher excess charges now demanded for asset insurance are being met by greater efforts 

to prevent fires and to limit damage. 

Thanks to the almost unlimited availability of raw materials (raw wood, sand, gravel, 

cement) and a sophisticated procurement policy that stringently avoids single-sourcing, the 

Pfleiderer Group is not dependent on any single supplier. Having enough raw materials available 

on time is ensured through purchasing logistics, together with inventory holdings. Risks 

resulting from massive price increases of raw materials are not foreseeable. Setting up cogeneration 

plants in which residual wood can be used as a fuel has decreased Pfleiderer’s 

dependency on the price of energy. 

Personnel Risks 

A well-balanced age structure among production team leaders and management, together 

with an attractive pay system and other schemes which bind qualified employees, means that 

Pfleiderer is not facing any particular risk of losing personnel essential to the Company.


Financial Risks 

High levels of capital expenditure and the expansion of operations over the last few years have 

increased the risk that loans can only be obtained at high interest rates and on unfavorable 

terms. 

The Company currently has access to both short-term and long-term credit lines amounting 

to a three digit million sum. Reduction of corporate debt resulting from disposal income 

has also had a positive effect. As a result, our credit volume available is large enough in terms 

of financial and cash funding to safeguard the planned growth of the Group. No substantial 

uptake of new loans is planned for the immediate future. 

No notable currency exchange risks are foreseen, due to the relatively low volume of 

business conducted outside the euro and dollar zones, and the Company’s targeted policy of 

exchange rate hedging. This applies equally to the interest rate risks in the planning period 

for existing loans and fixed conditions. 

Centralization of financial control within the treasury department of the holding company 

ensures that such operations, as well as the financial planning and controlling of the Group’s 

finances, are carried out professionally. Debtor management, which remains the responsibility 

of the individual operating segments, is also overseen by the treasury department – ensuring 

that limits imposed by credit insurance are kept. This is becoming more and more important in 

view of the increasing number of insolvencies. Derivative financial instruments are only applied 

centrally, and then only for strict hedging purposes. 

Legal Risks 

No litigation or legal procedures are pending or announced which could have a major effect 

on the results or operations of the Group or its operating segments. The holding company has 

its own legal department which ensures that matters are dealt with formally and correctly 

throughout the Group, in particular when drafting contracts or taking legal action. 

IT and Other Risks 

Major risks concerning IT and data processing have been reduced and removed by outsourcing 

hardware, especially mainframes and data networks and the operating of the system, to a 

specialist provider. 

Conversion to SAP R/3 of the last of Pfleiderer’s affiliated companies, and two further 

important functional areas, due to be completed in 2003, will eliminate the not inconsiderable 

risks involved in the use of software developed by the Company itself, or software developed 

by smaller providers. 

Our IT security concept is constantly being monitored and updated, particularly with 

respect to illegal access to corporate data from inside and outside the Company. Similarly, 

security for external data transfer and defenses against virus attack are constantly being 

improved.


Our insurers already increased the premium in 2002. Apart from a further big increase in 

the premium, Pfleiderer and the whole of the particleboard industry expects to see a large rise 

in excess charges in 2003. Together with its insurance broker, Pfleiderer is examining the 

whole insurance concept within the Group and looking at alternatives, including new insurers. 

An environmental manager is to be appointed, based at central services, but with responsibility 

for all operating areas. This person will draft guidelines, especially with respect to production 

and storage facilities, and will monitor operations to eliminate any weaknesses. In view 

of the products and raw materials used, Pfleiderer does not envisage any particular risks here. 

Studies for environmental contamination from old wooden mast and sleeper plants, closed 

down over a decade ago, have been performed by our staff and by outside specialists. Those 

areas affected are being treated on an ongoing basis. The resulting expenditure has been 

estimated and accruals set up to cover these costs. 

Overall Risk 

No risks, seen individually either in terms of damage levels or probability of occurrence, are 

recognizable within the Pfleiderer Group which could endanger the Company’s existence. 

Similarly, no risks are perceived with a high correlation to other risks which could endanger 

the existence of the Group. Nor have any risks been ascertained that could threaten the Company’s 

existence within a foreseeable period after 2003. The number of risks reported in the 

Group risk report is significantly lower at 45, compared to 68 in the previous year. This is 

largely due to the divestiture of the two Business Centers Insulation Technology and Doors and 

Windows. The number of risks reported for the remaining operating segments has not changed 

compared to the previous year. Around half of those risks determined in the previous year 

either no longer exist, or are no longer relevant, and thus have not been included in the risk 

portfolio 2003. The potential damage to the remaining business centers arising from those 

risks determined is 15 percent lower compared to the previous year. More than one third of 

these risks is below one million euros. The damage potential of the highest risk in the 2003 

portfolio is 50 percent lower than the highest risk reported for 2002. It is important to note 

that the chance of these risks becoming reality is very slight. The number of high-level risks for 

the whole Group is down by 75 percent for the same period. 

In December 2002, the international rating agency Fitch Ratings lowered Pfleiderer AG’s 

rating for senior unsecured debt from BBB- to BB+. This despite the successful sale of the 

two Business Centers Insulation Technology and Doors and Windows and a stable cash flow 

from the Infrastructure Technology Business Center which is supporting the Group. According 

to the rating agency, the business environment for wood-based panels will continue to remain 

difficult. The lower rating may mean that taking up new funds could prove more expensive in 

future.


Risk Management and Early-Warning System 

Pfleiderer’s early risk warning system complies with the German Control and Transparency Act 

(KonTraG) which demands clear organization taking into account the needs of a conglomerate, 

including such elements as predetermined corporate strategy and planning. Appropriate 

planning and monitoring systems have been set up at Pfleiderer. These include the continual 

reporting and monthly monitoring of the Business Centers, with full participation by the members 

of the Group’s Executive Board. The reporting system ensures that the Executive Board 

is kept up to date with comprehensive information about all areas of the Group. Organizational 

guidelines are updated and amended by a central unit within the holding company. Pfleiderer 

AG’s corporate audit unit carries out regular inspections to ensure the economic efficiency, 

and organizational and operational compliance, of the Company, as well as its adherence to 

legal requirements and internal guidelines. Quality control management in all the Business 

Centers, a centralized legal department, environmental protection managers at plant and 

Group level, a centralized Group treasury department, as well as institutionalized cooperation 

with one of the biggest insurance brokers, ensure that risks to the Group are avoided to the 

greatest extent possible. 

In compliance with the German Control and Transparency Act, the Company’s risk 

management system covers 

■ Risk determination and assessment 

■ Determination of how current risk is being acted on 

■ Identifying new, additional ways to act on risk 

■ Monitoring of risk developments and the action taken. 

The risk management unit in the holding company has been instructed to continue to 

develop the risk management system, to coordinate and monitor work in this area, to produce 

corporate reports and to make sure that this information is passed on quickly to the Executive 

Board, as well as supporting the Business Centers in their day-to-day risk management. 

The operating segments of the Company are responsible for recognizing and dealing 

appropriately with risks. All risks are assessed, including the extent of potential damage and 

the likelihood of it occurring. In this process, objective quantification of potential risk is given 

preference over verbal description. Risk inventories for the Company’s Business Centers are 

collated during workshops attended by senior management and employees from the business 

units. 

The results of these studies are compiled into a risk report which is presented to the full 

Executive Board, where it is discussed. The report is then presented to the Supervisory Board 

and the Company’s auditors. The risk report and risk inventories from the business centers are 

regularly updated during the course of the year and any changes or measures taken explained 

and documented.


43% 

■ IR 

■ PR 

■ Others 

4% 

53% 

Share corporate communications 

expenses 

marketing and communication 

The Pfleiderer Group’s marketing and communication activities are organized by function and 

target group. Customer communication takes place primarily from within the Business Centers, 

as this is where customer contact occurs, and from where marketing concepts can be best 

directed. The central services function Corporate Communication deals with internal employees 

communication, as well as public and investor relations. Around 82 percent of total 

marketing expenditure of 8.5 million euros is accounted for by customer communications in 

the Wood-Based Panels and Infrastructure Technology Business Centers. The budget for corporate 

communication breaks down as follows: 53 percent for investor relations, 43 percent 

for public relations and employee communication and 4 percent for other activities such as 

Internet presentation. 

Alongside the Annual Report and the Annual General Meeting, the “Image” magazine 

has become a central medium of communication, directed at Pfleiderer’s customers and 

employees. The magazine presents readers inside and outside the Company with information 

covering areas such as current business activities, projects and international locations, employee 

anniversaries and awards. The latest edition can be ordered from Pfleiderer’s website at 

www.pfleiderer.com. 


In 2002, marketing activities by the Wood-Based Panels Business Center were fully directed at 

its customers. A broad marketing mix was used to promote sales and inform customers, with 

around half of the marketing budget for Pfleiderer Wood-Based Panels being used for trade 

fairs and specialist exhibitions in 2002. For example, in February 2002, Pfleiderer Wood-Based 

Panels was represented at the internationally leading furniture suppliers trade fair “Zuliefermesse 

Ost-Westfalen”, better known just as the ZOW. Here Pfleiderer Wood-Based Panels presented 

its full product portfolio, as well as its latest design report. The trade fair is an important 

barometer of current design and decor creations within the furniture industry, creating the 

link between the latest color trends and current furniture design. 

The Wood-Based Panels Business Center has developed a new sales and marketing 

concept in response to the strategic re-positioning of the Pfleiderer AG. In future, the product 

portfolio will be more precisely tailored to the target groups, with more individual attention 

given to customers. This new marketing strategy will be implemented successively during the 

current year. 


In 2002, marketing activities for the Business Center Infrastructure Technology took the form 

of customer communications, with the aim of exploiting market potential through cross-selling 

and increasing market share in existing markets. Around half of Pfleiderer Infrastructure Technology’s 

marketing budget was used for trade fairs and exhibitions in 2002. Pfleiderer Wind

management report marketing and communication/investor relations pfleiderer ag 59 

Power was present at the Hanover Fair in April 2002 where it presented its offshore systems 

solution – MULTIBRID ® technology – as well as a new regulating principle for rotor blades, 

remote control systems for operating units and assembly without cranes for maximizing site 

utilization. In September 2002, Pfleiderer Rail Traffic took part in InnoTrans, Berlin, a specialist 

exhibition for transport systems, where it exhibited new variants of its Solid Track System for 

regional and inter-city rail traffic. Together with 15 partner companies, the Telecommunication 

Business Unit held specialist symposia at Nuremberg and Berlin, looking at the main challenges 

which the mobile communications industry is facing. The symposia also gave the Company 

an opportunity to demonstrate its competence as a turnkey supplier. 

investor relations 

On the stock exchange, 2002 proved to be a year marked by falling prices, following on from 

what had been a difficult year in 2001. The bear mood on the markets was not helped by news 

of falsified balance sheets and price manipulation elsewhere in the world, further undermining 

confidence in equities as a capital investment. In this situation, it was the small and mid 

caps that suffered most from heavy price falls. Many discussions and conferences held with 

investors during 2002 gave the Executive Board a chance to communicate the Company’s 

repositioning policy and the state of its business. Nevertheless, overall weak capital markets 

made themselves felt on the Pfleiderer share, too, which experienced a price per share loss 

of 4.53 euros or 60 percent during the course of the year. 

Changes in Pfleiderer share price compared to SDAX 

(Jan. 1 to Dec. 31, 2002) 

30 

15 

0 

–15 

–30 

–45 

–60 

–75 

2.1. 2 3 4 5 6 7 

2002 

8 9 10 11 30.12. 

Performance of the Pfleiderer Share in percent Performance SDAX-Index


29.57% 70.43% 

■ Pfleiderer UV 

■ Free Float 

Shareholder Structure 

Investor relations activities in 2002 involved personal communication with institutional 

and private investors, as well as the drafting of the Annual Report 2001 and organization of 

the Annual General Meeting on July 2, 2002. By moving over to registered shares, shareholders 

can now be directly invited to the AGM by Pfleiderer. Pfleiderer also sends out press releases 

and quarterly reports to shareholders where required. Alongside the quarterly reports, the 

Annual Report has become a major medium of communication between the Group and the financial 

community. In an effort to present the activities and financial position of the Company 

transparently, the Annual Report 2001 provides more details directed at investors. Pfleiderer 

gained third place among the SDAX companies for its comprehensive reporting in the German 

competition for annual reports in 2001 organized by Manager Magazin. 

The Annual General Meeting is the most important event in the year, above all for private 

investors. Around 1,500 visitors came to the Jurahallen Center on July 2, 2002, close to 

Pfleiderer AG’s head offices in Neumarkt. Above all, this was an opportunity to learn directly 

about the Company’s strategic repositioning, announced in May. The Annual General Meeting 

also voted in Mr. Koehler, CEO of SGL Carbon AG and Mr. Fiedler, Executive Vice President of 

the Ball Corporation, previously Schmalbach-Lubeca AG, as new members of the Supervisory 

Board. 

Dividend Policy 

The cornerstone of the Pfleiderer Group’s new strategic direction was the disposal of the 

Insulation Technology and Doors and Windows Business Centers in fiscal 2002. Although this 

resulted in income of around 225 million euros, the cumulative book loss produced a reduction 

in capital reserves. Accordingly, and in compliance with Sec. 150 (4) of the German Stock 

Corporation Act, no dividend may be paid for fiscal 2002. 

With regard to fiscal 2003, any dividend to be paid will depend on the earnings achieved 

and on the state of free cash flow. 

2002 2001 

Share price as of Dec. 31 2.75 euro 7.28 euro 

High/low 9.00/2.55 9.00/6.55 

Average daily turnover 11,271 shares 12,723 shares 

Number of shares 42.685 million 42.685 million 

Capital stock 

Market capitalization 

109,274,000 euro 109,274,000 euro 

as of Dec. 31 121.65 million euros 310.75 million euros 

Weighting in SDAX 

German stock exchance 

number/securities 

2.23% 3.29% 

identification number 676 474 676 474 

Abbreviation PFD4 PFD4 

ISIN DE0006764749 DE0006764749 

Earnings per share –0.93 euro 0.57 euro

management report investor relations/post-closure report/outlook pfleiderer ag 61 

post-closure report/outlook 

Underlying Economic Conditions 

At the start of 2003, the global economy showed signs of uncertainty, making it difficult for 

the leading market research institutions to provide a reliable prognosis. The threat posed 

by the Iraq conflict, rising oil prices and the lack of perspective on the international capital 

markets resulted in uncertainties continuing into the new year. The way the US economy 

progresses will determine developments in 2003. 

According to the forecasts of the Ifo Institute, the dollar will continue to weaken in 2003. 

The reasons for this are seen in the continued fear of terrorism, as well as the USA’s rising 

budget deficit, continued capital market fluctuations and low interest rates – the US Federal 

Reserve having lowered its base rate to 1.25 percent in November 2002. However, analysts 

are expecting a slight upward trend in the business cycle in 2003, provided private consumption 

and house construction return to more normal levels. The USA is expected to expand 

its exports, taking advantage of the weak dollar. Real GDP is expected to increase by around 

2.5 percent in 2003. 

In Europe, 2003 will start with just a slight increase in demand and production. Increases 

in taxation and other levies, as well as construction projects that had been brought forward to 

autumn 2002, will tend to retard growth. Real GDP in Europe is expected to increase by around 

1.5 percent. Capital investment in the construction sector is expected to reach its lowest point 

during 2003. 

The announcement and partial implementation of higher taxes and social charges by 

the Federal Government at the end of 2002 has also increased the gloom about the German 

economy. However, although private consumption is at a low ebb, uncertainty is expected to 

clear as the year progresses and a slight revival takes place. As the global economy slowly 

picks up again, German exports will also start to rise in 2003. With regard to the euro-dollar 

rate, price competition will not worsen as badly as it did in 2002. Particularly countries in 

central and eastern Europe, currently setting up their economies, expect to exhibit stronger 

demand for capital goods (Ifo Economic Forecast 2003). 

On the other hand, the Hamburg World Economic Archives (WHHA) expects real GDP in 

Germany to increase by only 0.7 percent. Furthermore, this market research institute expects 

higher unemployment and the danger that the German government will in 2003 again fail to 

meet the European criteria, with maximum new borrowing exceeding 3 percent of GDP.


Future Procurement 

The future development of procurement and sales largely depends on economic and sector 

growth in the markets in which Pfleiderer operates. In view of the difficult operating environment, 

particularly in Germany, consumer behavior towards the furniture industry, Pfleiderer 

Wood-Based Panel’s main customer, will be a determining factor. We expect competition with 

regard to prices and conditions to remain tough for this Business Center in 2003. 

On the other hand, supplies are secure thanks to long and medium-term agreements. By 

ensuring optimal storage conditions, the quantities and supply times of raw materials needed 

to produce our products have been calculated to ensure availability. While basic prices have 

been fixed in agreements with suppliers, it must be assumed that prices will be re-negotiated if 

the markets change. Shorter inventory holding periods through storage agreements, especially 

with paper suppliers, together with the introduction of just-in-time supplies for the Wood-Based 

Panels Business Center, have had a positive effect on cash in hand. As a result of these improvements, 

no significant pressure on cash funds due to material procurement is foreseen for 

the coming year. 

Existing international conflicts and increases in oil prices in 2002 means that prices for 

oil and gas-based pre-products are likely to be volatile in 2003. Master agreements with suppliers 

are mainly long-term, so that no significant effect on the cost of manufacturing is expected 

in fiscal 2003. 

Procurement of fresh and used wood as raw material in particleboard production, and for 

thermal conversion in our biomass co-generation plants, is safeguarded over the long term by 

our affiliate Interwood GmbH and does not harbor any undue price risks. 

Future Corporate Structure 

The Pfleiderer Group intends to continue to refine its organizational structure in order to 

achieve further cost efficiency. Reorganization and changes to legal sub-entities within the 

Group are constantly under review in order to meet the strategy of earnings-orientated growth. 

Wood-based panels production sites in Germany, as well as logistics and commercial 

control, will be bundled together under Pfleiderer Holzwerkstoffe GmbH & Co. KG. The Tipla, 

Interwood and Eltec Business Units will continue to operate as independent affiliates, and their 

management has already been organized along functional lines. As a result of concentrating 

on Wood-Based Panels, Masts (in future, Poles & Towers) and Rail Traffic (in future, Track 

Systems), Group management structures will also change. In particular, the Executive Board 

will be more involved at the operative level in the activities in the business units.

management report post-closure report/outlook pfleiderer ag 63 

Separation of Eltec and Tipla is planned for 2003, and is shown in the end-of-year figures 

under “Discontinued operations”. In the long term, the Pfleiderer Group is looking for a partner 

for its wind power activities capable of bringing operations forward and providing a suitable 

development environment. In view of these developments, this segment is also shown under 

“Discontinued operations” in the Corporate Financial Statements of the year under review. Development 

of the offshore MULTIBRID ® technology has already reached a pleasingly advanced 

stage, and looks commercially promising, given the right corporate environment. 

Future Organization 

In 2003, the Wood-Based Panels Business Center will be communicating with its customers 

focusing more on target groups, and will be operating a more focused marketing concept. 

Sales, marketing and production functions will be newly organized on this foundation. An extensive 

customer and market study was carried out to analyze the needs of the most important 

customer groups in industry and trade. The results of this study will be taken into account in 

the future brands concept by Pfleiderer Wood-Based Panels. 

A new flexible production and logistics network means that products will be available 

at very short notice, strengthening Pfleiderer Wood-Based Panels as a core operating segment. 

Bringing together the different production sites in Germany ensures that short delivery times 

can be upheld, even for small order volumes. As a result, nearly all of the product range will be 

available within 48 hours. Ensuring that all production plants achieve the same product quality 

and variants means that customers will gain from constant quality and short delivery times 

throughout the whole range of products. 

Focusing on the Wood-Based Panels and Infrastructure Technology Business Centers, 

while divesting Insulation Technology and Doors and Windows means that as of January 1, 

2003 the Pfleiderer Group is operating with lean overhead structures, which will give it the 

strength to fight harder for leading positions in the market. This is also reflected in changed 

management structures. Shorter decision paths, greater efficiency and tighter interlocking 

of strategic and operative tasks are expected as a result. 

Changes in Personnel and Social Policy 

The Pfleiderer Group intends to continue its current personnel policy. The Group’s productivity 

is constantly being monitored with regard to the efficiency of its employees and structures. 

The personnel development scheme, part of the Pfleiderer Business Campus, will continue 

in 2003 as part of the Company’s long-term development strategy. In particular, various 

schemes and measures will be introduced to the organization on a widespread basis and will 

be extended to additional employee areas. At the same time, expenditure for personnel development 

has been trimmed back as part of the general program to save costs.


Future Capital Expenditure 

Weak economic growth means that future capital expenditure must be carefully planned and 

cautiously implemented. Of the many projects being considered, those which appear to hold 

the highest potential in terms of growth and earnings will be selected. For the time being, 

the total capital expenditure budget will remain at the same level of depreciation, at around 

50 million euros. 

In order to achieve a sustained reduction in energy costs in particleboard production, it 

is planned to equip the Leutkirch and Rheda-Wiedenbrück sites with biomass fueled co-generation 

plants. 

In 2003, expansion of production plant in Wieruszów in Poland to cope with large-size 

particleboard is planned. This will enable the plant to supply a broader range of customers in 

the furniture industry and gain new market shares. This measure will also greatly improve our 

ability to compete in the Baltic States, Russia and Scandinavia. Part of the Pfleiderer Group’s 

medium-term planning includes the start-up of our own engineered wood production plant 

in Russia. We see promising high-growth potential in this market, which was already being supplied 

by our Polish plants in 2002. 

Apart from this, expanding the product portfolio by including MDF board has now been 

given a high priority by Pfleiderer Wood-Based Panels. 

The Infrastructure Technology Business Center will be strengthening its Track Systems 

Business Unit through further investments in 2003. The high standards of quality and profound 

know-how of this business unit has led to higher demand for Pfleiderer track systems. In view 

of this, in 2003, Pfleiderer will be investing more in its Rheda Solid Track System, which is 

designed for high-speed links operating at over 300 kph. European planners intend to connect 

the cities of Amsterdam and Brussels with the “HSL-Zuid” Project, a high-speed link. In order 

to cope with demand here, Pfleiderer will be setting up a sleeper production plant in the 

Netherlands. Sleeper production plants are also planned for Rumania and Brandenburg. 

Future Research and Development 

Pfleiderer AG’s research and development activities are largely directed at product developments 

in its Wood-Based Panels and Infrastructure Technology Business Centers. No significant 

change in development activity or the number of staff employed in this area is expected, 

with expenses and spending in 2003 at the same levels as those of 2002. 

Apart from Pfleiderer’s continual improvement and development of all product areas, 

current research projects such as in the MULTIBRID ® technology for offshore use will be continued. 

Development here has reached an advanced stage, and the first 5 megawatt prototype 

will be set up for testing near Bremerhaven.

management report post-closure report/outlook pfleiderer ag 65 

Future Results 

Sales and earnings growth in fiscal 2003 depends on growth within the Group’s Business 

Centers. If the markets in which we operate and the policies that affect them remain stable, 

sales and earnings growth in the Pfleiderer Group will remain stable. Nevertheless, developments 

in the business centers could move in other directions. In view of the fact that the German 

economy is only expected to grow slightly in the coming year, Pfleiderer expects the main 

momentum for growth to come from abroad, particularly from eastern Europe. In this respect, 

it is of fundamental importance to strengthen the market leadership of our wood-based activities 

in Poland and gain new customers and market shares. 

The Wood-Based Panels Business Center will continue to face difficult operating conditions. 

Sales and earnings expectations are therefore very cautious for the German market. 

For that reason, we are making big efforts to expand the international share of sales from its 

present level of 52.5 percent. In order to obtain greater independence from the German 

market, we are focusing on exports to European countries. This particularly applies to markets 

where Pfleiderer has already been introduced, such as the U.K. or France, but where we 

still have a low market share. These are areas where more growth can be obtained without 

the market volume itself having to increase. Activities by our Polish affiliates have developed 

pleasingly in the past. Exports to the Russian markets are an important factor here. This is 

an area we intend to build on in 2003 and we expect non-German business with wood-based 

panels to provide stable sales and earnings results. 

Due to planning certainty among customers in the Track Systems Business Unit, business 

here is expected to continue to grow in 2003. On the other hand, sales and results in the 

Telecommunication Business Unit are expected to be modest in 2003, due to current weak- 

ness in the markets. However, this should be compensated by the Business Units Poles & Towers 

and Track Systems. Growth is still being generated from systems business with our Solid Track 

Systems. Apart from the “HSL-Zuid” project, other international projects in the planning stage 

are expected to produce orders in the coming year. Pfleiderer can count on its competence in 

project engineering in this field, especially when it comes to constructing high-speed links. 

In Germany, Pfleiderer is already market leader with its existing product portfolio of concrete, 

steel and fiberglass masts. However, there are great opportunities elsewhere in Europe 

and in the USA for these products. Our concentrated strategy of internationalization in Europe 

and the construction of production capacity in the USA will enable us to expand business in 

this segment over the next few years while maintaining our margins. Emphasis is being placed 

on building on cross-selling potential among sales structures, at the same time enabling us to 

gain additional markets. Further training given to our employees, as well as the opening of foreign 

branches, means that we are aiming for higher rates of growth than the market average.


Future Dividends 

Although no dividend payment can be made for 2002, our fundamental dividend policy will 

continue in 2003. Accordingly, Pfleiderer AG will base its decision on whether to pay a dividend 

on the results obtained for the year and the state of free cash flow. 

The general political and economic outlook for the coming year underline how right and necessary 

it was for the Pfleiderer Group to take up a new corporate strategy. This now focuses on 

the core competences of two Business Centers, Wood-Based Panels and Infrastructure Technology. 

The next stage is further internationalization, a major factor for success if the Company 

is to achieve earnings-orientated growth in future. For that reason, it is the declared goal of the 

Pfleiderer Group to further strengthen its exports and to gain new markets. Our international 

presence, particularly in the eastern European countries, will be further expanded, making us 

more independent of the German economy. 

Following its strategic repositioning, Pfleiderer is now facing the new fiscal year in a 

much healthier state. Our new corporate strategy provides us with the financial leeway to 

develop the Group over the long term on a positive and stable footing. This foundation, based 

on a balanced portfolio of two high-performing business centers, will enable the Company to 

achieve further earnings power and a sustained increase in its going concern value.

pfleiderer ag 67 

Consolidated Financial Statements of the Group 

as of December 31, 2002 68 

Consolidated Balance Sheet 68 

Consolidated Statement of Income 70 

Consolidated Statements of Cash Flow 71 

Segment Report 72 

Consolidated Statement in Stockholders’ Equity 74 

Notes to Financial Statements 76 

Analysis of Group Assets 118 

Balance Sheets of Discontinued Operations 120 

Concluding Remarks and Auditor’s Opinion 122 

Consolidated Companies 124 

Financial Statements of the Legal Entity Pfleiderer AG 

as of December 31, 2002 126 

Balance Sheet 126 

Statement of Income 127 

Analysis of Fixed Assets 128 

Notes to Financial Statements 130 

Concluding Remarks and Auditor’s Opinion 145 

In Brief 

Glossary 146 

Index 148 

Multi-Year Summary 150 

Financial Calendar and Contacts 153


Pfleiderer Consolidated Balance Sheet December 31, 2002 

Assets Notes Dec. 31, 2002 Dec. 31, 2001 

‘000 euros ‘000 euros 

Cash and cash equivalents (1) 58,242 55,753 

Securities classified as current assets 13 11 

Trade receivables and other assets (2) 146,312 201,314 

Inventories (4) 114,397 132,681 

Deferred taxes 8,702 7,023 

Prepaid expenses 2,231 2,321 

Assets of discontinued operations 35,045 345,183 

Current assets 364,942 744,286 

Property, plant and equipment (5) 381,546 417,576 

Intangible assets (6) 102,435 107,515 

Financial assets (7) 2,072 9,583 


Other assets (8) 2,802 880 

Long-lived assets 522,493 580,247 

Total assets 887,435 1,324,533

consolidated financial statements balance sheet pfleiderer ag 69 

Liabilities and stockholders’ equity Notes Dec. 31, 2002 Dec. 31, 2001 


Short-term liabilities (9) 143,328 149,295 

Financial liabilities (10) 42,885 124,860 

Other short-term accruals (11) 31,534 33,371 


Deferred income 1,953 2,758 

Liabilities of discontinued operations 23,314 207,735 

Short-term liabilities 246,077 520,775 

Long-term financial liabilities (13) 322,603 397,384 

Accruals for pensions (21) 61,263 59,818 


Other long-term liabilities 252 246 

Other long-term accruals (14) 9,772 8,614 

Deferred income (15) 6,888 7,779 

Minority interests 45,478 46,815 

Long-term liabilities 485,570 575,305 

Stockholders’ equity (17) 155,788 228,453 

Total liabilities and stockholders’ equity 887,435 1,324,533 

The accompanying notes are an integral part of theses Consolidated Financial Statements.


Consolidated Statement of Income (Loss) 2002 

Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Sales 1,028,432 1,041,995 

Cost of sales – 755,347 – 736,600 

Gross margin 273,085 305,395 

Selling expenses – 117,376 – 115,801 

Administrative expenses – 106,336 – 104,860 

Research and development – 1,159 – 1,689 

Other income and expenses 1,966 4,872 

Amortization 0 – 9,652 

Operating result 50,180 78,265 

Interest income/expenses – 15,391 – 22,783 

Investment income/expenses 589 112 

Other income/expenses – 1,749 – 370 

EBT of continued operations before minority interests 33,629 55,224 

Taxes on income and earnings – 13,200 – 9,180 

Results of continued operations before 

minority interests 20,429 46,044 

Losses from discontinued operations – 52,452 – 14,243 

Income taxes on discontinued operations – 3,000 – 4,237 

Results before minority interests – 35,023 27,564 

Minority interests – 4,641 – 3,345 

Results after minority interests – 39,664 24,219 

Earnings per share – 0.93 0.57 

Earnings per share continued operations 0.37 1.00 

Average number of shares in circulation 42,673,784 42,685,000 


Pfleiderer Consolidated Statements of Cash Flow 2002 

consolidated financial statements statement of income/statement of cash flows pfleiderer ag 71 

Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Cash flow from operating activities: 

Results continued operations after minority interests 20,429 46,044 

Changes: 

Depreciation and amortization of long-lived assets 60,566 63,013 

Change in accruals for pensions 2,282 2,113 

Operative cash flow 83,277 111,170 

Change in current assets 75,325 31,261 

Change in other long-lived assets 9,133 – 13,986 

Change in short-term liabilities, financial liabilities only – 13,146 11,297 

Change in other long-term liabilities, financial liabilities only – 15,062 8,886 

Change in adjustment item for minority interests – 5,978 1,365 

Cash flow from operating activities 133,549 149,993 

Cash flow from investing activities 

Cash paid for investments in intangible assets – 5,694 – 9,566 

Cash paid for investments in property, plant and equipment – 38,258 – 36,099 

Cash paid for investments in financial assets – 792 – 701 

Cash paid for acquisition of first-time consolidated companies 0 – 14,756 

Cash received for disposal of intangible assets 261 4 

Cash received for disposal of property, plant and equipment 7,177 10,590 

Cash received for disposal of financial assets 6,480 6,761 

Cash flow from investing activities – 30,826 – 43,767 

Cash flow from operating activities after investing activities 102,723 106,226 

Cash flow from financing activities 

Change in financial liabilities – 163,254 – 16,236 

Distribution to minority interests 0 – 825 

Dividends paid by Pfleiderer AG – 8,537 – 8,537 

Cash paid for purchase of treasury stock – 8 0 

Cash flow from financing activities – 171,799 – 25,598 

Change in cash and cash equivalents – 69,076 80,628 

Effect of exchange rate fluctuations on cash and cash equivalents 95 2,312 

Effects of discontinued operations on cash and cash equivalents 70,265 – 50,546 

Effect of purchase accounting on cash and cash equivalents 1,207 0 

Cash and cash equivalents at the beginning of the period 55,764 23,370 

Cash and cash equivalents at the end of the period 58,255 55,764 



Pfleiderer Consolidated Segment Report 2002 


Dec. 31, 2002 Dec. 31, 2001 


Group sales to third parties 693,543 721,403 

Inter-Group sales 3,957 2,060 

Sales 697,500 723,463 

thereof domestic market 331,267 360,090 

thereof foreign markets 366,233 363,373 

foreign share in % 52.5 50.2 

Cost of sales – 527,745 – 533,253 

in % of sales – 75.7 – 73.7 

Gross margin 169,755 190,210 

in % 24.3 26.3 

Cost of selling – 92,829 – 89,939 

in % of sales – 13.3 – 12.4 

General and administrative expenses – 53,322 – 54,772 

in % of sales – 7.6 – 7.6 

Research and development expenses – 1,058 – 1,193 

in % of sales – 0.2 – 0.2 

Other comprehensive income and expenses 10,413 24,177 

Amortization 0 – 4,158 

Income (loss) before financial income 32,959 64,325 

EBIT 31,859 64,325 

in % of sales 4.6 8.9 

EBITDA 70,586 106,306 

in % of sales 10.1 14.7 

Capital expenditure 19,026 20,965 

Employees (average) ohne Auszubildende 3,452 3,543 

Segment assets in million euros 403.4 478.4 

ROCE in % 7.9 13.4

consolidated financial statements segment report pfleiderer ag 73 

Infrastructure Technology Consolidation Pfleiderer Group 

Dec. 31, 2002 Dec. 31, 2001 Dec. 31, 2002 Dec. 31, 2001 Dec. 31, 2002 Dec. 31, 2001 

‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros 

334,665 310,583 

864 12,552 

335,529 323,135 – 4,597 – 4,603 1,028,432 1,041,995 

202,152 185,966 530,508 540,618 

133,377 137,169 497,924 501,377 

39.8 42.4 48.4 48.1 

– 238,985 – 221,739 – 755,347 – 736,600 

– 71.2 – 68.6 – 73.4 – 70.7 

96,544 101,396 6,786 13,789 273,085 305,395 

28.8 31.4 26.6 29.3 

– 27,259 – 26,582 – 117,376 – 115,801 

– 8.1 – 8.2 – 11.4 – 11.1 

– 33,193 – 39,142 – 106,336 – 104,860 

– 9.9 – 12.1 – 10.3 – 10.1 

– 120 – 495 – 1,159 – 1,689 

0.0 – 0.2 – 0.1 – 0.2 

752 3,895 1,966 4,872 

0 – 5,493 0 – 9,652 

36,724 33,579 – 19,503 – 19,639 50,180 78,265 

35,973 33,104 – 18,938 – 19,532 48,894 77,897 

10.7 10.2 4.8 7.5 

45,633 47,942 – 6,759 – 13,338 109,460 140,910 

13.6 14.8 10.6 13.5 

18,027 33,309 7,692 6,848 44,745 61,122 

1,931 1,943 308 294 5,691 5,780 

127.3 173.6 32.0 11.7 562.7 663.7 

28.3 19.1 8.7 11.7


Consolidated Statements of Changes in Stockholders’ Equity 

Fiscal 2002 

Capital Additional Special item 

stock paid-in conversion 

capital to US GAAP 

‘000 euros ‘000 euros ‘000 euros 

As of January 1, 2002 

Dividends of Pfleiderer AG 

Purchase of treasury stock 

Change in adjustment item for currency translation 

Reclassification of foreign currency items of deconsolidated companies 

109,274 137,919 91,116 

Change in adjustment item from derivative financial instruments 

Change in adjustment item from pension valuation 

Reclassification of derivative financial instruments of deconsolidated companies 

Result after minority interests 

Utilization of accruals – 126,992 

As of December 31, 2002 109,274 10,927 91,116 

Fiscal 2001 

Capital Additional Special item 

stock paid-in conversion 

capital to US GAAP 


As of January 1, 2002 

Dividends of Pfleiderer AG 

Change in adjustment item from currency translation 

Change in adjustment item from valuation of derivative financial instruments 

Change in adjustment item from pension valuation 

Result after minority interests 

109,274 137,919 91,116 

As of December 31, 2001 109,274 137,919 91,116 


consolidated financial statements schedule of stockholders’ equity pfleiderer ag 75 

Comprehensive income (loss) 

Retained Treasury Unappro- 

Other comprehensive income (loss) 

Total 

earnings stock priated Translation Derivative Pension 

profit adjustment financial 

instruments 

valuation 

‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros 

67,746 0 – 187,004 13,740 – 2,303 – 2,035 228,453 

– 8,537 – 8,537 

– 8 – 8 

– 18,543 – 18,543 

– 8,860 8,860 0 

– 6,460 – 6,460 

547 547 

– 360 360 0 

– 39,664 – 39,664 

126,992 0 

67,746 – 8 – 117,433 4,057 – 8,403 – 1,488 155,788 

Retained Treasury Unappro- 

Comprehensive income (loss) 

Other comprehensive income (loss) 

Total 

earnings stock priated Translation Derivative Pension 

profit adjustment financial 

instruments 

valuation 


67,746 0 – 202,686 2,430 2,797 0 208,596 

– 8,537 – 8,537 

11,310 11,310 

– 5,100 – 5,100 

– 2,035 – 2,035 

24,219 24,219 

67,746 0 – 187,004 13,740 – 2,303 – 2,035 228,453


Notes to Financial Statements 

I. Business Segments and Operating Principles 

II. Exemption under Section 264b German Commercial Code (“HGB”) 

III. Summary of Significant Accounting Policies 

Following divestment of its Business Centers Insulation Technology and Doors and Windows in 

the year under review, Pfleiderer AG (hereinafter “Pfleiderer” or “the Company”) is concentrating 

on its core competences Wood-Based Panels and Infrastructure Technology with their main 

business units Rail Traffic and Concrete Masts and Towers. 

The assets and liabilities remaining after the sale of Insulation Technology and Doors 

and Windows Business Centers are shown together with the Wind Power Business Unit in the 

balance sheet and income statement under discontinued operations. The activities of two business 

units in the Wood-Based Panels Business Center, which no longer belong to the defined 

target markets of the Pfleiderer Group, are also shown here. The figures from the previous fiscal 

year have been adjusted for discontinued operations in accordance with US GAAP in order 

to improve comparability. In this procedure, operations sold and deconsolidated in the year 

under review are also shown in the comparable figures of the previous fiscal year under discontinued 

operations. 

The consolidated financial statements of Pfleiderer AG are included in the consolidated 

financial statements of Pfleiderer Unternehmensverwaltung GmbH, Nuremberg. The consolidated 

financial statements as of December 31, 2002 of Pfleiderer Unternehmensverwaltung 

GmbH, Nuremberg, have been prepared in accordance with United States Generally Accepted 

Accounting Principles (US GAAP) for the first time. Under Sec. 292a German Commercial 

Code (“HGB”), Pfleiderer Unternehmensverwaltung GmbH, Nuremberg is exempted from drawing 

up its financial statements in accordance with the German Commercial Code (“HGB”). The 

financial statements have been deposited with the Commercial Register of the District Court 

(Amtsgericht) of Nuremberg. 

Those companies which have applied the exemption rule are marked accordingly in the list of 

consolidated companies. 

Basis of Presentation 

For the first time, Pfleiderer AG’s consolidated financial statements have been drawn up in 

accordance with US GAAP. Under Sec. 292a German Commercial Code (“HGB”), Pfleiderer AG 

is therefore exempted from drawing up consolidated financial statements in accordance with 

the German Commercial Code (“HGB”). All amounts are stated in the financial statements in 

euros.

consolidated financial statements notes pfleiderer ag 77 

Scope of Consolidation 

The consolidated financial statements include the individual financial statements for Pfleiderer 

AG and those affiliated companies in which it has a majority or controlling interest. All the 

main directly or indirectly controlled affiliates are included in the consolidated financial statements. 

Apart from Pfleiderer AG, 26 German and 20 foreign affiliates have been fully consolidated 

in the consolidated financial statements. In the year under review, 3 affiliates have been 

newly consolidated and 16 affiliates have been deconsolidated. 

Due to their immateriality with regard to the assets, financial position and earnings of the 

Group, 8 affiliates (2001: 12) have not been consolidated. 

Number of companies fully consolidated: 

2002 2001 

Germany 26 32 

Foreign 20 27 

Total 46 59 

Number of fully consolidated companies shown in the financial statements under continued 

operations: 

Affiliated Companies Included in Consolidation for the First Time: 

New formations 

– Fideris Spanplatten AG, St. Gallen/Switzerland 

– Duropal S.A.S., Reims/France, 

Other 

– Travertec S.R.L., Brasov/Rumania 

2002 2001 

Germany 18 18 

Foreign 19 16 

Total 37 34 

Travertec S.R.L., Brasov/Rumania, was formed in the previous year, but not included in the 

consolidation for reasons of immateriality.


Effects of Additions to the Consolidated Group on Main Balance Sheet Positions 

of Continued Operations: 

‘000 euros 

Assets 

Long-lived assets 62 

Inventories 1,116 

Trade accounts receivable 2,415 

Liabilities 

Accruals 83 

Other liabilities 1,415 

As a result of additions to the consolidated group, revenues from continued operations rose by 

10.2 million euros. 

Principles of Consolidation 

Capital consolidation is accounted for using the purchase accounting method. In this method, 

the cost of the acquired interest is offset against the share in equity attributable to the parent 

company at the date of acquisition. Any differences are allocated to assets and liabilities of the 

affiliate company in proportion to the share in equity held, to a maximum of the proportionate 

fair market value, (proportional purchase method). Any remaining differences are capitalized as 

goodwill and reviewed for impairment in accordance with SFAS No. 142. 

Shares in non-consolidated affiliated companies are valued at acquisition cost. Due to 

immateriality, shares in associated companies were not stated using the equity method. 

All intercompany accounts receivable and payable, sales, expenses and income, as well 

as interim results between consolidated companies are eliminated for consolidation purposes. 

Minority interests, including minority interests’ share in profit or loss, are determined on 

the basis of equity as of balance sheet cut-off date and reported in the consolidated balance 

sheet as adjustment item for minority interests. 

Acquistions and Disposals/Discontinued Operations 

The affiliated companies Fideris Spanplatten AG, St. Gallen/Switzerland, and Duropal S.A.S., 

Reims/France were formed in fiscal 2002. These companies were consolidated for the first 

time as of the date of their formation. Accordingly, the consolidated income statement takes 

into account the results of these companies from the date of their formation. 

The Insulation Technology and Doors and Windows Business Centers were sold in fiscal 

2002. The effects of the sale and deconsolidation of these business centers on the consolidated 

balance sheet and consolidated income statement are explained below under IV 16 

“Discontinued operations”.


The positions of the Wind Power Business Unit, as well as two other business units in the 

Wood-Based Panels Business Center, are shown in the balance sheet under discontinued operations. 

Estimates 

Preparation of the financial statements calls for estimates and assumptions to be made by 

management which affect the reported amounts of assets, liabilities, income and expenses in 

the financial statements, as well as the disclosure of contingencies and commitments. Actual 

results could differ from those estimates. 

Foreign Currency Translation 

The financial statements of the affiliated companies of Pfleiderer AG have been drawn up in 

the local functional currencies of their countries. The balance sheet amounts are translated into 

the currency used in these financial statements (euro) using the period-end exchange rates. 

This does not apply to equity which is translated at the exchange rate applicable at the date of 

a transaction. The income and expense accounts were converted at the weighted average 

exchange rate for the fiscal year under review. Differences resulting from currency translation 

are shown separately under equity (“other changes in equity without effect on income”) until 

the consolidated company is sold or otherwise liquidated. 

The main foreign currencies for the Group are as follows: 

Average exchange rate at December 31, 2002 2001 

1 euro = 1 euro = 

Great Britain (GBP) 0.6505 0.6088 

Poland (PLN) 4.0329 3.5068 

Rumania (ROL) 34,084.2000 27,770.0000 

Russia (RUB) 33.4800 26.9100 

Switzerland (CHF) 1.4527 1.4805 

Slovenia (SIT) 228.4860 214.2060 

Czech Republic (CZK) 31.5200 31.9900 

Hungary (HUF) 236.0650 245.9550 

USA (USD) 1.0477 0.8820 

Ukraine (UAH) 5.4063 4.7267 

Realization of Sales 

Sales are mainly generated from the supply of products and services. Sales are accounted 

according to US GAAP and net of reductions such as bonuses, discounts or rebates at the date 

when realized or realizable and earned. This is generally the case where clear proof of an 

agreement exists, the delivery or service has been effected, the price firmly agreed or can be 

clearly ascertained, as well as payment reasonably secured.


Revenues from long-term production are considered realized when total revenue, total 

costs and percentage of completion can be determined sufficiently reliably (Percentageof-Completion 

Method, as mainly defined in SOP 81-1 and ARB 45). Under the Percentage-of- 

Completion Method, the Group reported revenues totaling 1,342 thousand euros (2001: 

1,512 thousand euros). 

Cash and cash equivalents 

Cash and cash equivalents are cash on hand and bank balances, including those with an 

original maturity of up to three months. 

Concentration of Credit Risk 

The Group sells a broad range of products and services to a wide circle of industrial and commercial 

customers in Germany and abroad. Outside Germany, the Pfleiderer Group is mainly 

represented in Europe, Asia, Australia, North America and South Africa. The concentration of 

credit risk from accounts receivable is limited due to the large number of customers. A part 

of the accounts receivable has also been insured through a credit insurance. 

In the period under review, sales with one particular customer exceeded 5 percent of the 

total volume of the sales. The Company does not see any credit risk arising in connection with 

this major customer. 

The Company invests cash reserves via bank accounts and in other high-value investments 

that can be liquidated at short notice. The Company monitors the risk involved by 

obtaining regular ratings on the creditworthiness of its counterparties. Apart from that, such 

investments only take the form of deposits or short-term investments. 

Receivables 

Receivables are accounted at net realizable value, i.e. their nominal value less individual and 

lump-sum valuation allowances. Individual valuation allowances are made when receivables 

are partly or fully uncollectible, or where it is probable that collection will fail. In each case, 

allowances must be determined sufficiently precisely. An estimated lump-sum valuation 

allowance is applied to cover the general bad debt risk. Sufficient accrued liabilities are formed 

to cover bonuses and discounts. 

Sales of receivables by the Group are treated in accordance with Statement of Financial 

Accounting Standards No. 140 (SFAS No. 140, “Accounting for Transfers and Servicing of 

Financial Assets and Extinguishments of Liabilities”). According to SFAS No. 140, the company 

must recognize the financial and servicing assets it controls and the liabilities it has incurred 

and derecognized financial assets when control as defined by SFAS No. 140 has been surrendered. 

The Group treats transferred receivables which are part of its asset-backed securities 

scheme as sold. However, a transfer is only reported as a sale when receivables are beyond 

the reach of the company and its creditors, this including bankruptcy or other forms of administration. 

Additionally, there must be no rights to pledge or exchange transferred receivables 

and the possibility or obligation of transferred receivables being sold back to the company 

excluded.


Inventories 

Inventories are valued at the lower of acquisition or manufacturing cost or market on the basis 

of individual values or the weighted averages method. Where justified, the first-in, first-out 

(FIFO) method is used. In principle, replacement costs are used to determine the market value. 

The ceiling for the determined market value is the net realizable value estimated under normal 

trading conditions, less expected costs of completion and sales. The floor for the determined 

market value is the net realizable value less a normal profit margin. 

Production costs include direct material and labor charges as well as applicable overheads 

resulting from the production process. 

Appropriate devaluations are carried out to cover all recognizable risks in inventory 

assets resulting from reduced salability or obsolescence. Discounts are applied to articles that 

are no longer readily marketable. 

Use of Financial Instruments 

The Group transacts business in numerous international currencies subject to exchange rate 

movements. Pfleiderer reduces its risk in different markets by hedging with derivative instruments. 

Market Value of Financial Instruments 

The market value of a financial instrument is the price at which a third party would be prepared 

to accept the rights and/or obligations arising from it. The Company allows financial instruments 

to be valued by the other contracting parties, as a rule banks. 

The carrying values of liabilities arising from finance leases are based on market prices 

for similar financing and largely correspond to the fair value. The same applies for financial 

assets. 

Intangible Assets 

Purchased intangible assets are capitalized at acquisition cost and amortized over their useful 

lives on a straight-line basis. In the case of intangible assets which can be identified as having 

been generated by the company itself, (apart from software) only those direct external costs 

that are involved in the generation of such assets are capitalized and amortized over their 

useful lives on a straight-line basis over a period of 3 to 5 years. 

Expenses incurred in connection with the purchase and own development of computer 

software used by the Company, including expenses involved in maintaining the operational 

condition of such software, are capitalized and amortized over the useful life of the software.


Goodwill 

Goodwill is capitalized and subject to an impairment test at regular intervals (at least once a 

year) in accordance with SFAS 142. SFAS No. 142 requires that goodwill and other intangible 

assets with an indefinite useful life are no longer amortized, but tested for impairment at least 

once a year. The impairment rules of SFAS No. 142 must be applied to all goodwill and other 

intangible assets acquired through business combinations after June 30, 2001. According 

to SFAS No. 142, all other goodwill acquired before June 30, 2001 is subject to impairment as 

from fiscal 2002. 

Goodwill with a finite useful life is amortized over its expected useful life. 

Property, Plant and Equipment 

Property, plant and equipment is valued at historical acquisition or production cost, less 

accumulated depreciation. Depreciation is carried out over the useful life of the assets using 

the straight-line method. Production cost for plant and equipment produced by the Company 

includes direct material and labor charges, as well as an appropriate amount of allocable overheads 

and – where the manufacturing process extends over a longer period of time – interest 

on borrowing from third parties during the construction period. Administrative costs are only 

capitalized where they are directly related to manufacture. Costs of maintenance and repair 

are recognized as expenses. Assets with a finite useful life are depreciated with the straightline 

method. For reasons of immateriality, low-value assets with an acquisition cost of under 

410 euros are completely written off in the year of acquisition in agreement with German accounting 

practice. Where assets are sold or scrapped they are retired from the balance sheet 

with any profit or loss duly accounted. 

Scheduled depreciation is based the following useful lives: 

Leasehold improvements and leased assets are depreciated over the duration of their useful 

life or over the rental or lease period, whichever is shorter. 

years 

Buildings 20 – 25 

Technical equipment and machinery 8 – 16 

Other equipment, office equipment 3 – 11 

State Aid and Subsidies 

Upon receipt, state aid and subsidies are deducted from the acquisition and production costs 

of the investment supported, provided the conditions relating to the investment are fulfilled.


Impairment of Long-Lived Assets and Intangibles with a Limited Useful Life 

Long-lived assets and intangibles are reviewed for impairment whenever events or changes in 

circumstances indicate that the carrying amount of an asset may not be recoverable. Where 

facts and circumstances indicate that an asset has been impaired, the carrying amount of the 

asset is compared to its estimated future undiscounted net cash flow. Where necessary, the 

assets are depreciated to their fair value. Fair value is based on the discounted net cash flow 

generated by the asset over its useful life. 

An inventory of property, plant and equipment in the Group was carried out in fiscal 

2002. Due to differences in the inventory and the lack of salability of certain assets, expenses 

for retirements and scrapping of 1,358 thousand euros were taken into account. 

Leasing 

Leasing transactions are classified either as capital leases or operating leases. Transactions 

which satisfy the criteria of SFAS 13 are treated as capital leases in the Group. In this case the 

leased property is carried as a liability for the Group (lessee). 

SFAS 13 sets out the following criteria: 

– The lease transfers ownership of the property to the lessee at the end of the lease term 

– The lease contains a bargain purchase option to acquire the leased property considerably 

below its market value. 

– The lease term of the leased property is equal to 75 percent or more of the estimated 

useful life of the leased property 

– The present value at the beginning of the lease term of the future minimum lease payments 

equals or exceeds 90 percent of the fair value of the leased property. 

All other lease agreements in which the Group appears as lessee are treated as operating 

leases, with the consequence that the lease payments are expensed as they occur. 

Stock-Based Compensation 

The Company reports issued stock options according to the intrinsic value based method in 

compliance with Accounting Principles Board Opinion No. 25 “Accounting for Stock Issued to 

Employees” (APB No. 25) and pertinent legal precedent. In accordance with APB No. 25, the 

difference between the market price of the company’s share at the date of issue of the option, 

and the exercise price of the subscription right is disclosed under personnel expenses. With 

regard to pro-forma disclosures in accordance with Statement of Financial Accounting Standards 

121 (SFAS No. 123 “Accounting for Stock Based Compensation”) we refer to Section IV 

No. 18.


Accrued Liabilites for Pensions and Similar Obligations 

Accruals for pensions and similar obligations are calculated using the projected unit credit 

method. A minimum obligation is calculated, i.e., the amount in excess of those pension 

accurals affecting income taken into account in the past. If no intangible asset is recognized, 

or if there are additional obligations exceeding the value of the intangible asset, the amount is 

offset against equity. Not realized actuarial profits and losses are amortized in accordance 

with the individual details of the pension plan, generally at longest over the remaining period of 

service of the employee or the life-expectancy or his/her dependents. 

Other Accruals 

Other accruals, including accruals for environmental protection measures resulting from legal 

claims, local authority regulations or another basis are formed at the date when it is probable 

that they have been incurred and their amount can be reasonably estimated, i.e. where a legal 

obligation exists. 

The Company sets up accruals in connection with environmental protection measures 

where it seems likely that a claim could be made and where it can be estimated. Changes to 

these estimates are recorded in the accounting period in which the change takes place. While 

the Company cannot estimate the effect of future laws, the Group assumes that a final ruling 

on these matters will not have a significant effect on the consolidated financial statements. 

Future expenses for environmental protection measures are not discounted to their present 

value. The Company carries a receivable for estimated claims against insurance companies 

or third parties where it appears likely that such claims will be received. 

Advertising Costs 

Expenses for advertising and sales promotions are expensed at the date of their inception. In 

the year under review, expenses for advertising and sales promotions came to 6,229 thousand 

euros, compared to 1,755 thousand euros in the previous year. The significant increase in 

these expenses compared to 2001 is mainly due to costs incurred in connection with a new 

brand strategy conceived for the Wood-Based Panels Business Center. 

Research and Development Costs 

Expenses for research and development are expensed as incurred.


Deferred Taxes 

Deferred tax assets and liabilities are set up for all temporary differences between the values 

shown in the tax balance sheet and those in the consolidated balance sheet, as well as for tax 

loss carryforwards (“temporary concept”). Tax rates are used which, under current legislation, 

will apply in future when temporary differences are probably reversed. The effects of changes 

in tax law on deferred taxes are charged to the consolidated statement of income in the accounting 

period in which they occur. Deferred tax assets are only reported when it is probable 

that the related tax advantages will be realized. 

When estimating the realization of deferred tax assets the Company considers whether 

the probability that they will be realized greater than 50 percent. 

Comprehensive Income 

SFAS No. 130 “Reporting Comprehensive Income” obliges the complying companies to show 

comprehensive income and its components net income (after minority interests) and other 

comprehensive income separately in the consolidated financial statements. 

Other comprehensive income includes sales, expenses, profits and losses not shown 

under net income (loss). Both other comprehensive income and comprehensive income are 

shown in the statement of changes to equity. 

Earnings and Diluted Earnings per Share 

Earnings per share (EPS) were calculated in accordance with SFAS No. 128 “Earnings per 

Share”. SFAS No. 128 lays down that EPS must be shown for all companies that have issued 

shares. Normal EPS is the net profit (loss) divided by the weighted average of outstanding 

shares. Common-stock equivalents used for purposes of stock option compensation can have 

a dilutive effect. Where a dilutive effect occurs, diluted earnings per share must also be shown. 

New Accounting Pronouncements 

In June 2001, the FASB issued SFAS 143, “Accounting for Asset Retirement Obligations”. 

This new statement regulates the accounting for and reporting of obligations resulting from 

the retirement of property, plant and equipment and the associated retirement costs. The new 

standard applies to legal obligations associated with the retirement of property, plant and 

equipment that result from the acquisition, construction, development and/or the normal 

operation of a long-lived asset. SFAS 143 requires that the fair value of a liability for an asset 

retirement obligation be recognized in the period in which it is incurred if a reasonable estimate 

of fair value can be made. The associated asset retirement costs are capitalized as part 

of the carrying amount of the long-termed asset and subsequently depreciated over the asset’s 

useful life. The liability is adjusted to its present value at the end of each reporting period, with 

effect on results. Any positive or negative difference in its carrying value arising when the 

liability is discharged is recorded with effect on results. SFAS 143 must be applied to fiscal 

years beginning after June 15, 2002, but can be applied before this time. The Company will apply 

SFAS No. 143 from January 1, 2003 onwards. The potential effects of applying SFAS 143 

have not yet been fully calculated.


In April 2002, the FASB issued SFAS 145, “Rescission of FASB Statements No. 4, 44, 

and 64, Amendment of FASB Statement No. 13, and Technical Corrections.” This statement 

re-regulates gains and losses on premature extinguishments of debt, as well as the treatment 

of transactions from financing leases which are treated as rental agreements in future due to 

modifications of the agreement. These transactions must be treated as sale and leaseback 

transactions in accordance with SFAS 98. SFAS 145 also contains diverse technical changes. 

The provisions of SFAS 145 are effective for fiscal years beginning after May 15, 2002, although 

they can be applied prior to this date. The Company will apply SFAS 145 from January 

1, 2003. The Company does not expect the application of SFAS 145 to have a significant 

impact on the consolidated financial statements. 

In July 2002, the FASB issued SFAS 146 “Accounting for Costs Associated with Exit or 

Disposal Activities”, which annuls Emerging Issues Task Force (EITF) Issue 94-3, “Liability 

Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including 

Certain Costs Incurred in a Restructuring).” SFAS 146 requires that expenses resulting 

from the exit or disposal of activities be first recognized when costs resulting from an obligation 

to a third party are incurred, and not at the point in time when the management has 

committed to an exit or disposal plan. These expenses include certain compensation payments 

to employees, costs incurred through early termination of contracts and costs related to the 

closure of plants or the relocation of employees. SFAS 146 also rules that the obligation be 

valued at fair market value and modified in accordance with estimated cash flows. The rules of 

the new statement are to be applied where there is a prospect of closure or sale of operations 

which will be initiated after December 31, 2002. The statement can be applied earlier. Calculations 

of any effects arising from application of SFAS 146 on the consolidated financial 

statements have not been concluded. The Company will apply the statement from January 1, 

2003. 

In October 2002, the FASB issued SFAS 147 “Acquisitions of Certain Financial Institutions 

– an Amendment of FASB Statement No. 72 and 144 and FASB Interpretation No. 9.” 

This standard deals with how to account for the acquisition of a financial institution, as well as 

how to account for long-standing customer relationships as intangible assets in connection 

with SFAS 144 “Accounting for the Impairment or Disposal of Long-Lived Assets”. SFAS 147 

must be applied to fiscal years starting after October 1, 2002. The Company will apply SFAS 

147 with effect from January 1, 2003. Pfleiderer does not expect the application of SFAS 147 

to have a significant impact on the consolidated financial statements. 

In December 2002, the FASB issued SFAS 148 “Accounting for Stock-Based Compensation 

– Transition and Disclosure”. SFAS 148 amends FASB Statement No. 123 “Accounting 

for Stock-Based Compensation” and offers alternative methods of transition to the fair-value 

method under SFAS 123. SFAS 148 also changes the disclosure requirements for the notes 

under SFAS 123 and APB Opinion No. 28 “Interim Financial Reporting”. Accordingly, in the 

summary of main accounting principles, the effect of the method of accounting chosen (either 

APB 25 or SFAS 123) on results and earnings per share with regard to employee subscription 

rights must be given in the annual and quarterly reports. SFAS 148 does not require the company 

to use the fair-value method pursuant to SFAS 123. However, all companies must prepare


the notes in accordance with SFAS 148, irrespective of whether they apply APB 25 or SFAS 

123. SFAS 148 must be applied to fiscal years ending after December 15, 2002. The Company 

continues to apply APB 25, but the information required under SFAS 148 has also been included 

in the notes to these consolidated financial statements. 

In November 2002, the FASB issued FASB Interpretation No. 45 “Guarantor’s Accounting 

and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness 

of Others”. The Interpretation will considerably change the current practice of accounting and 

reporting of sureties and guarantees in the notes. Sureties and guarantees which display the 

characteristics described in the Interpretation and do not fall under one of the exemptions 

must be accounted for at fair value. Previously, a liability only had to be recognized when a loss 

was probable and could be estimated (in accordance with FASB Statement No. 5 “Accounting 

for Contingencies”). Apart from that the Interpretation requires that essential details be given 

in the notes regarding practically all sureties and guarantees, even if the probability of them 

being taken up is considered slight. The accounting rules of Interpretation No. 45 must be applied 

to prospective guarantees and sureties which have been made or modified after December 

31, 2002, irrespective of the fiscal year of the party issuing the surety or guarantee. The 

requirements relating to the notes must be applied to fiscal years ending after December 15, 

2002. Pfleiderer has provided the appropriate details in the notes (see footnote 1, Section VII). 

Calculations of the possible effects of the accounting rules relating to guarantees in accordance 

with FASB Interpretation No. 45 have not been concluded.


IV. Notes to the Consolidated Balance Sheet 

1. Cash and cash equivalents 

2. Other short-term assets 

3. Trade receivables 

As of December 31, 2002 cash and cash equivalents stood at 58,242 thousand euros (2001: 

55,753 thousand euros). Cash and cash equivalents include checks, cash and bank balances 

with an initial maturity of up to three months. 

The decline in accounts receivable from affiliated companies reflects repayments of short-term 

interest-bearing loans extended to Pfleiderer Unternehmensverwaltung GmbH & Co. KG. 

Other assets include receivables from the disposal of discontinued operations. 

Trade receivables are as follows 

Dec. 31, 2002 Dec. 31, 2001 


Trade receivables 94,828 147,098 

Tax reimbursement claims 25,594 20,101 

Accounts receivable from affiliated companies 245 18,789 

Other 25,645 15,326 

Total 146,312 201,314 

Dec. 31, 2002 Dec. 31, 2001 


Trade receivables 108,760 163,199 

less individual valuation adjustments 13,226 15,220 

less lump sum valuation adjustment 706 881 

Receivables, net 94,828 147,098 

All receivables have a term to maturity of up to one year. 

Appropriate lump sum valuation adjustments based on past experience have been made 

to cover general credit risks. 

As of December 31, 2002, the Company sold receivables amounting to 43,889 thousand 

euros (2001: 11,085 thousand euros). The Company also had a retained interest from these 

sales, including the provision of processing services. The Group only sells receivables covered 

by credit insurance. Expenses of 2,449 thousand euros (2001: 1,058 thousand euros) were 

incurred in connection with the sales of receivables. Most of these expenses relate to interest 

payments shown under financial result in the consolidated statement of income.

4. Inventories 

5. Property, plant and equipment 


The inventories are as follows: 

Dec. 31, 2002 Dec. 31, 2001 


Raw materials, consumables and supplies 50,050 59,716 

Work in progress 15,695 26,694 

Finished goods and merchandise 48,052 46,212 

Payments on account 600 59 

Total 114,397 132,681 

Information on changes in property, plant and equipment is presented in the analysis of 

consolidated fixed assets included herein. 

Property, plant and equipment is as follows: 

Dec. 31, 2002 Dec. 31, 2001 


Land, land rights and buildings, including buildings 

on third-party land 178,821 186,577 

Technical equipment and machinery 172,972 199,686 

Other equipment, factory and office equipment 13,075 13,064 

Construction in progress 16,678 18,249 

Total 381,546 417,576 

Depreciation on property, plant and equipment in fiscal 2002 came to 48,769 thousand euros 

(2001: 47,276 thousand euros). Of this, 1,642 thousand euros were recognized as extraordinary 

depreciation in the year under review in order to fully write off a particleboard press and 

an impregnation unit in Poland (the machines in question were no longer usable in the production 

process). Additionally, real estate with buildings for sale was valued at net realizable value 

and written down by 1,665 thousand euros. 

In fiscal 2002, the Group capitalized 161 thousand euros as interest charges on 

qualifying property. No interest charges on qualifying property were capitalized in the previous 

financial year. 

In 2002, state grants totaling 2,120 thousand euros were received for a site in Leipzig, 

part of the Infrastructure Technology Business Center. The grant is payable on condition that a 

specific minimum number of people are employed. This condition was fulfilled. The grant is tied 

to this condition until the end of November 2007. Additionally, grants of 465 thousand euros 

were received for the Wood-Based Panels site in Gütersloh. 

Additional grants were also awarded to business units shown in the accounts under discontinued 

operations, or to units that have already been sold. These particular grants relate to 

the development of a 5 MWh wind converter of the Wind Power Business Unit. The grant 

amounted to 1,300 thousand euros, plus a further investment grant of 1,535 thousand euros to 

set up the Delitzsch production site. The investment grant for Delitzsch is also coupled to the


6. Intangible assets 

unit employing a specific number of employees. All constraints relating to these grants were 

assigned to the purchasing party when the Insulation Technology Business Center was sold. 

The grant for the wind converter was posted to income, as expenses for developing this plant 

in fiscal 2002 are shown under expenses for research and development. 

Property, plant and equipment of 3,088 thousand euros less accumulated depreciation 

of 954 thousand euros was capitalized under capital leases (carrying value 2,134 thousand 

euros). 

Individual assets were only assigned as collateral in the USA. The collateral assignment 

worth 1,132 thousand euros was accepted as part of an ongoing acquisition deal from the 

previous fiscal year. 

Dec. 31, 2002 Dec. 31, 2001 


Licenses, software and patents 8,965 13,614 

Goodwill 89,412 90,083 

Payments on account 4,058 3,818 

Total 102,435 107,515 

Amortization of other intangible assets in fiscal 2002 came to 9,978 thousand euros (2001: 

15,385 thousand euros). Additions to intangible assets totaled 5,694 thousand euros. Following 

amortization, the carrying value as of December 31, 2002 was 4,610 thousand euros. 

Apart from scheduled amortization, intangible assets in fiscal 2002 were written down by 

a higher amount of 5,000 thousand euros due to reduction of the estimated useful life of software 

in the service area, shown under administrative expenses. 

From January 1, 2002 the Company is applying the new accounting standard SFAS No. 

142 (Goodwill and Other Intangible Assets) to corporate acquisitions. This particularly relates 

to goodwill, as laid down by the Financial Accounting Standard Board in July 2001. Under SFAS 

No. 142, goodwill is no longer subject to scheduled amortization; instead the Company must 

carry out an annual impairment test. 

In line with this, the Company subjected goodwill carried in the consolidated financial 

statements to an impairment test. In fiscal 2001, the Company charged 8,040 thousand euros 

to scheduled amortization of goodwill, plus impairment of 1,612 thousand euros. 

Net income of continued operations, net of taxes for fiscal 2001, excluding scheduled 

amortization of goodwill and intangible assets no longer written down under SFAS 142, came 

to 53,526 thousand euros. This also takes account of tax effects on goodwill. Pro-forma profit 

per share of continued operations was 1.18 euros (calculated net of minority interests).

7. Financial assets 

8. Other long-lived assets 


Estimated future write-down on intangible assets still subject to scheduled amortization is as 

follows: 

2003 

‘000 euros 

2,844 

2004 2,506 

2005 1,609 

2006 1,023 

2007 429 

Thereafter 554 

8,965 

The composition and change in financial assets is shown in the analysis of consolidated fixed 

assets. 

Dec. 31, 2002 Dec. 31, 2001 


Shares in affiliated companies 1,606 2,233 

Investments 60 181 

Other loans 406 7,169 

Total 2,072 9,583 

Other loans include 6,250 thousand euros as of Dec. 31, 2001 as a loan to a previously 

affiliated company. The loan was fully repaid in fiscal 2002. 

In fiscal 2002, extraordinary amortization of 1,819 thousand euros (2001: 480 thousand 

euros) was offset against financial assets marked to market. This mainly relates to investments 

in a non-consolidated affiliated company. This write-down of 1,000 thousand euros was 

calculated using the discounted future cash flow method. 

Other long-lived assets in the reporting year came to 2,802 thousand euros (2001: 

880 thousand euros).


9. Other short-term liabilities 

10. Financial liabilities 

Other short-term liabilities are as follows: 

Dec. 31, 2002 Dec. 31, 2001 


Financial derivatives 13,146 7,268 

Customer bonus payments 8,650 5,787 

Other taxes 6,897 6,045 

Corporate income tax 6,121 7,040 

Wages and salaries 6,097 5,364 

Withheld social security contributions 5,461 5,050 

Taxes due from income and church taxes 4,308 3,640 

Payments received on receivables sold 1,436 27,201 

Value added tax 1,064 1,478 

Other personnel liabilities 918 1,251 

Interest cut-off 27 290 

Other 8,880 14,618 

Total 63,005 85,032 

Short-term loans granted to and capital borrowed by the Company are as follows: 

The average annual interest rate is 6 percent. 

Dec. 31, 2002 Dec. 31, 2001 


Payments on account received 3,102 3,174 

Trade accounts payable 75,226 60,544 

Liabilities to affiliated companies 1,995 545 

Other 63,005 85,032 

143,328 149,295 

Dec. 31, 2002 Dec. 31, 2001 


Other short-term liabilities and short-term 

parts of long-term loans 43,321 124,333 

Capital leases 564 527 

Total 42,885 124,860

11. Other short-term accruals 

12. Capital leases 

13. Long-term liabilities 


Dec. 31, 2002 Dec. 31, 2001 


Accruals for personnel liabilities 17,180 20,514 

Accruals for production 3,913 5,112 

Accruals for sales and marketing 3,130 4,160 

Other accruals 7,311 3,585 

31,534 33,371 

In 1998 and 1999, the Company entered into lease agreements for wood-processing 

machinery for its Polish sites and for technical plant at its sites in the USA. These lease agreements 

have been treated as capital leases. The future minimum lease payments from lease 

agreements as of December 31, 2002 are: 

2003 

‘000 euros 

668 

2004 657 

2005 454 

Minimum lease payment, total 1,779 

less calculated interest 216 

Cash value of minimum lease payments 1,563 

less short-term part 564 

Long-term part of leasing obligations 999 

The Company also finances itself by taking up long-term loans, generally based on variable 

EURIBOR or LIBOR rates. The average interest rate for these loans in fiscal 2002 was approximately 

6 percent (2001: under 6 percent). Variable interest payments are adequately hedged 

using interest swaps.


14. Other long-term accruals 

At the balance sheet date, the Company was carrying fixed-interest loans totaling 

20,452 thousand euros with an average interest rate of 5.9 percent. These loans were valued 

at 22,395 thousand euros as of December 31. 2002. 

Dec. 31, 2002 Dec. 31, 2001 

Long-terms Short-term Long-term 

amounts part of less part of more 

than 1 year than 1 year 

‘000 euros ‘000 euros ‘000 euros ‘000 euros 

Long-term financial 

liabilities excluding 

capital leases 330,329 8,725 321,604 395,762 

As of December 31, 2002, repayments on long-term liabilities for the next five fiscal years and 

thereafter are as follows: 

2003 

‘000 euros 

8,725 

2004 29,424 

2005 33,490 

2006 35,911 

2007 47,724 

Thereafter 175,055 

330,329 

Dec. 31, 2002 Dec. 31, 2001 


Restructuring program 2,339 794 

Accruals for environmental risk 311 311 

Anniversary payments 4,959 5,777 

Pre-retirement part-time work 2,138 1,731 

Other 25 1 

9,772 8,614 

Accruals for environmental risk relate to obligations to recultivate land and address environmental 

damage. 

Accruals for restructuring have been formed to cover probable quantifiable liabilities in 

the accounts. This mainly relates to compensation to 12 hourly paid and 16 monthly salaried 

staff in the Infrastructure Technology Business Center. This position also covers potential 

losses from current rental agreements which cannot be terminated in the near future, as well

15. Deferred income 

16. Discontinued operations 


as lease payments for cars not used in the 1st quarter of 2003. Accruals have also been 

formed for outstanding severance payments to 34 industrial and 7 office members of staff in a 

plant since closed down belonging to the Wood-Based Panels Business Center. 

Deferred income includes income from the sale of receivables due over the coming years from 

a lease agreement (non-recourse financing). The deferred income item is released (affecting 

income) in installments corresponding to the actual lease payments as of their due dates. The 

outstanding residual amount from non-recourse financing stood at 10,432 thousand euros as 

of December 31, 2002. Normal interest rate conditions apply. The agreement terminates on 

May 1, 2007. 

During fiscal 2002, the Company disposed of the Insulation Technology and Doors and Windows 

Business Centers. The Windows Business Unit was disposed of in June 2002 through a 

management buy-out of Pfleiderer Fenster GmbH & Co. KG by employees of this company. The 

Doors Business Unit was disposed of by selling Pfleiderer Bauelemente GmbH & Co. KG and its 

affiliates to the Danish doors manufacturer Vest-Wood A/S, Logstor, Denmark. The transaction 

took effect as of October 31, 2002. 

The operative business of the Insulation Technology Business Center was sold to the 

Spanish company Uralita S.A., Madrid, this transaction taking effect as of November 30, 2002. 

This disposal included the sale of investments in 11 affiliates, a separate asset deal covering 

the sale of all intangible assets and property, plant and equipment with a few insignificant 

exceptions, as well as all inventories owned by Pfleiderer Dämmstofftechnik GmbH & Co. KG. 

The remaining assets and debts of those companies not sold are shown in the Consolidated 

Balance Sheet under discontinued operations. 

Disposal of discontinued operations resulted in a loss of 36,209 thousand euros in spite 

of the positive cash flow of 170,112 thousand euros. The following table shows the results of 

the disposal: 

‘000 euros 

Agreed aggregate selling price 225,000 

plus cash funds, less interest-bearing liabilities 

(of which bank loans of 29,450 thousand euros) – 54,888 

Cash received from sale of discontinued operations 170,112 

Disposal of assets and debts of operations sold – 189,448 

Ancillary selling expenses and follow-up costs of sale – 18,021 

– 37,357 

plus income from deferred taxes 1,148 

Loss from sale of discontinued operations – 36,209


Discounting the suspension of depreciation and its positive effect on the operative result, the 

loss from the disposal of discontinued operations would have been 27,995 thousand euros. 

The operative business of the operations sold developed as follows: 

2002 2001 


Revenue 322,436 347,235 

Other expenses 304,223 – 341,143 

Effect of suspending depreciation 11,750 0 

EBIT 29,963 6,092 

Net interest – 13,794 – 13,645 

EBT 16,169 – 7,553 

Taxes 915 – 3,336 

Taxes from suspension of depreciation – 3,536 0 

Results after tax 13,548 – 10,889 

The operative business of other discontinued operations developed as follows: 

2002 2001 


Revenues 33,713 40,806 

Other expenses 63,688 – 43,237 

EBIT – 29,975 – 2,431 

Net interest – 1,289 – 963 

EBT – 31,264 – 3,394 

Taxes – 1,527 – 901 

Result after taxes – 32,791 – 4,295 

Losses from remaining discontinued operations include expenses from extraordinary amortization 

of goodwill and licenses totaling 9,598 thousand euros. Impairment testing resulted in a 

further writedown of 7,703 thousand euros. 

Results from other discontinued operations include research and development costs of 

8,015 thousand euros, as well as income from a grant totaling 1,300 thousand euros.


Summary of assets and liabilities of discontinued operations: 

Dec. 31, 2002 Dec. 31, 2001 


Cash and cash equivalents and securities classified 

as current assets 173 6,143 

Trade receivables and other assets 15,411 70,326 

Inventories 14,651 66,174 

Other current assets 151 869 


Property, plant and equipment 4,638 169,949 

Intangible assets 11 25,110 

Financial assets 10 252 

Deferred taxes 0 6,328 

Other assets 0 32 

Long-lived assets 4,659 201,671 


Dec. 31, 2002 Dec. 31, 2001 


Liabilities 16,862 138,723 

Financial liabilities 0 27,294 

Accruals 1,060 9,860 

Other short-term liabilities 0 374 


Long-term financial liabilities 1,821 9,991 

Accruals for pensions 2,213 6,048 

Deferred taxes 305 8,526 

Other liabilities 139 1,153 

Other long-term accruals 914 2,419 

Minority interests 0 3,347 



A presentation of the balance sheets of the discontinued operations (prior to consolidation) is 

included as an annex to these Notes.


17. Shareholders’ equity 

Changes to shareholders’ equity are presented above in the analysis of shareholders’ equity 

of the Group. 

Subscribed Capital 

As of the balance sheet date, capital stock remained unchanged at 109,273,600 euros divided 

into 42,685,000 ordinary shares. 

Authorized Capital 

On July 10, 2001, the Shareholders’ Meeting authorized the Executive Board, subject to 

approval by the Supervisory Board, to increase capital stock once or several times by an aggregate 

nominal amount of 51,200 thousand euros through issue of new shares against cash 

contributions. 

Conditional Capital 

The Company is also entitled to issue conditional capital to an aggregate nominal amount of 

20,480 thousand euros until June 30, 2006. 

As part of the Pfleiderer AG Stock Option Plan, the Executive Board is also authorized to 

issue further conditional capital to an aggregate nominal amount 10,927 thousand euros. 

Additional Paid-In Capital 

Additional paid-in capital of the Group was adjusted to the additional paid-in capital of 

Pfleiderer AG amounting to 10,927 thousand euros. 

Dividends 

The Shareholders’ Meeting (Annual General Meeting) of July 2, 2002 resolved to pay a dividend 

of 0.20 euro per share and to carry forward the remaining amount of 6,679 thousand euros to 

the next financial year. 

The Executive Board must inform the Supervisory Board of its intended proposal to the 

Shareholders’ Meeting with regard to unappropriated accumulated earnings. Unappropriated 

accumulated earnings are distributed to shareholders unless the shareholders’ meeting 

decides otherwise. 

Profits are distributed to shareholders according to their paid-up share of capital stock 

and the period of time that has elapsed since the cut-off date from which dividend payment is 

calculated. 

Where new shares are issued, a different method of calculating entitlement can be used. 

In order to avoid an accumulated deficit of 191,084 thousand euros at the end of the 

fiscal year 2002, the Executive Board proposed to the Supervisory Board that part of the additional 

paid-in capital and retained earnings be used to balance the loss, and that no dividends 

be paid. Sec. 150 German Stock Corporation Act (AktG) does not allow the payment of dividends 

from additional paid-in capital when additional paid-in capital is used to achieve breakeven. 

The Supervisory Board agreed to the proposal made by the Executive Board.

18. Stock appreciation rights 

and stock option programs 


Comprehensive Income 

Following the disposal of the Insulation Technology and Doors and Windows Business Centers, 

a total of 9,220 thousand euros reported under the adjustment item for currency translation 

and the adjustment item from valuation of financial derivatives without effect on results had to 

be reclassified as loss carryforward. 

The Company decides each year whether a Stock Option Plan will be run, who is eligible and 

how many stock options each employee may receive. Granting stock options is subject to the 

condition that employees also pay in a personal contribution. Stock options have a currency 

of 6 years and may not be exercised until after three years from issue. The number of stock 

options for each employee is based on the amount of the personal contribution divided by 

the reference price and multiplied by a factor of 12. The reference price is calculated from the 

Company’s average share price in the months September through November. Stock options 

can be exercised when the acquisition price lies between 110 –125 percent of the reference 

price. 

Stock Appreciation Rights 2000 

On November 14, 2000, the Company decided to set up a stock appreciation rights plan, 

subsequently approved by the Shareholders’ Meeting of December 5, 2000 which authorized 

the Executive Board to grant employees up to 1,270,608 stock appreciation rights until 

June 30, 2006. The reference price is 9.73 euros. The exercise price lies between 10.70 euros 

and 12.16 euros, with a weighted average exercise price of 11.43 euros. 

2002 2001 

Stock options Stock options 

in thousands in thousands 

Outstanding at beginning of year 1,123 0 

Granted 0 1,271 

Exercised 0 0 

Expired 204 148 

Outstanding at year-end 919 1,123 

Exercisable at year-end 0 0


Stock Option Program 2001 

Under the terms of the Stock Option Program (SOP) 2001 proposed on July 10, 2001 and 

subsequently approved by the Supervisory Board on October 25, 2001, the Executive Board is 

authorized to grant eligible employees up to 4,268,500 non-transferable options to acquire 

Company shares. Of the 116 employees potentially eligible, 65 senior executives took part in 

SOP 2001. The reference price is 7.45 euros. The exercise price lies between 8.20 and 

9.31 euros, with a weighted average exercise price of 8.76 euros. 

2002 2001 

Stock options Stock options 

in thousands in thousands 

Outstanding at beginning of year 1,257 0 

Granted 0 1,257 

Exercised 0 0 

Expired 177 0 

Outstanding at year-end 1,080 1,257 

Exercisable at year-end 0 0 

Stock Option Program 2002 (continuation of SOP 2001) 

Following on from the Stock Option Program proposed in 2001 and adopted on July 10, 2001, 

the Stock Option Program 2002 was confirmed on September 10, 2002 by the Executive 

Board, and on September 20, 2002 by the Working Committee of the Supervisory Board. 

Under the terms of SOP 2002, the Executive Board is authorized until June 30, 2006 to grant 

eligible employees remaining unassigned non-transferable options on company stock. The 

reference price is 4.67 euros. The exercise price lies between 5.14 euros and 5.84 euros, with 

a weighted average exercise price of 5.49 euros. In 2002 no options were granted from 

SOP 2002 as the time limit for eligibility had not expired as of balance sheet date. 

The Company records subscription rights in accordance with Statement of Financial 

Accounting Standards No. 123, Accounting for Stock Based Compensation (SFAS 123), using 

the intrinsic value method from APB Opinion No. 25, Accounting for Stock Issued to Employees 

(APB 25). All options were issued at an exercise price in excess of the market price at the date 

of issue. Under this arrangement, the Company charged no personnel expenses in connection 

with the subscription rights granted. 

In order to comply with SFAS No. 123, adjusted pro-forma information on the Consolidated 

Financial Statments must be shown as if the Company had accounted for employee 

subscription rights using the fair value method. The fair value of subscription rights granted for 

fiscal years 2001 and 2002 was estimated based on weighted averages at the time of granting 

the options using the Black-Scholes Method which was modified as follows: risk-free interest 

rate of 4.7 percent for 2001; volatility of 42 percent for 2001, expected dividend yield at time

19. Derivative financial 

instruments 


of estimation in 2001 of 2 percent; weighted average life expectancy of the subscription right 

3 years. SOP 2002 was not included in the estimate as the time limit for eligibility had not 

expired as of the balance sheet date. 

Adjusted pro-forma information (in thousand euros, except per share data): 

Dec. 31, 2002 Dec. 31, 2001 

Adjusted pro-forma (loss)/profit – 40,020 24,091 

Adjusted undiluted pro-forma (negative) earnings per share – 0.93 0.56 

All existing stock option plans were given prior approval by the Shareholders’ Meeting. 

Derivative financial instruments are used to minimize or exclude risk resulting from day-to-day 

operations where underlying transactions are exposed to fluctuations in currency and interest 

rates. The corporate guidelines specifically state that hedging transactions be used to counteract 

such risks. Only marketable interest rate derivatives and forward currency hedging managed 

by banks of first-class standing are used. Derivative financial transactions are limited to 

hedging operative business and related financing. The Company does not conduct derivative 

financial business for purposes of speculation. 

Interest rate risks are secured through interest swaps and caps. These instruments are 

mainly used to hedge variable liabilities held in euros or US dollars. 

The following interest rate derivatives were recognized at balance sheet date: 

Nominal value 

Dec. 31, 2002 Dec. 31, 2001 


Interest swaps 257,919 370,022 

Interest caps 8,150 – 

266,069 370,022 

Currency hedging is appled to mitigate fluctuation in US dollars, Swiss francs, pounds sterling 

and euros. Hedging relates to transactions shown in the accounts, as well as to transactions 

considered highly likely to occur.


The following forward currency transactions were recognized at balance sheet date: 

Nominal value 

Dec. 31, 2002 Dec. 31, 2001 


Exchange rate hedges of current/recognized transactions 5,725 – 

Exchange rate hedges of expected cash flow 7,114 1,125 

12,839 1,125 

The nominal values represent the reference values of interest swaps, as well as the purchase 

and selling amounts of derivative transactions, valued at the prevailing hedge rates on the 

balance sheet date. 

Valuation of interest rate derivatives is performed by the contracting bank by discounting 

expected cash flows at market interest rates over the remaining term of the instrument (markto-market 

valuation). Valuation of forward currency hedges corresponds to the expenses or 

income which would otherwise be realized if the transaction was terminated at balance sheet 

date. 

Summary of derivative transactions recognized at balance sheet date: 

Nominal Market Nominal Market 

value value 

Dec. 31, 2002 Dec. 31, 2002 Dec. 31, 2001 Dec. 31, 2001 


Interest rate derivatives 266,069 – 14,876 370,022 – 4,609 

Currency hedges 12,839 – 65 1,125 – 31 

Total 278,908 – 14,941 371,147 – 4,640 

Derivative financial instruments are recognized in the balance sheet at market value under 

other accounts receivable, other assets or other liabilities. 

In compliance with SFAS No. 133 (Accounting For Derivative Instruments And Hedging 

Activities), derivative financial transaction are accounted as follows: 

Where forward currency deals are used to hedge the fair value, changes in value of the 

derivative, as well as in the underlying transaction, are recognized with effect on income. In 

the case of cash flow hedges for foreign currency risks on future payments, changes in value 

up to completion date are recognized directly in profits/losses. 

Where interest swaps or caps are used to hedge the cash flow, changes in fair value are 

treated as changes in equity not affecting profits and reported under comprehensive income 

(part of equity). For interest rate derivatives which, in accordance with SFAS No. 133 are not 

sufficiently effective as “cash flow hedges”, changes in their value are recognized in the 

Income Statement under interest expenses/income.


Financial derivatives valued in accordance with SFAS No. 133 at balance sheet date: 

Nominal Valuation Nominal Valuation 

value value 

Dec. 31, 2002 Dec. 31, 2002 Dec. 31, 2001 Dec. 31, 2001 


Not recorded directly in 

profits/losses 219,178 – 12,912 341,204 – 3,783 

Recorded in profits/losses 59,730 – 2,029 29,943 – 857 

Total 278,908 – 14,941 371,147 – 4,640 

The value of derivatives affecting profit or loss derives from termination charges for financial 

instruments as part of the disposal of discontinued operations. 

The remaining term of interest rate derivatives essentially corresponds to the currency 

period of the underlying financial transaction, and lies between 1 and 7 years. The average 

currency period is 5 years. The remaining term of forward currency exchange hedges lies 

between 1 to 12 months. 

Market value, Market value, Total 

due due Dec. 31, 002 

within 1 year in over 1 year 


Interest rate derivatives 5,177 260,892 266,069 

Forward currency hedges 12,839 – 12,839 

Total 18,016 260,892 278,908 

Exposure from derivative instruments is limited to the risk that the contracting banks are 

unable to fulfill their obligations. The maximum potential loss for the Group cannot exceed the 

positive market value of the derivatives. The maximum risk borne by the Company during forward 

currency hedging is the change in the amount secured due to exchange rate fluctuations.


20. Deferred taxes 

Deferred tax assets and liabilities are shown in the balance sheet in accordance with SFAS 

No. 109 “Accounting for Income Taxes” if future tax effects are expected to result from temporary 

differences between balance sheet carrying values and their tax balance sheet values on 

the one hand, and from losses carried forward on the other. 

Taxes on income which apply to the Group are summarized below: 

Current taxes 

2002 2001 


German 3,561 2,033 

Non-German 12,134 10,182 

Deferred taxes 

German – 3,024 – 6,972 

Non-German 529 3,937 

Total 13,200 9,180 

Long-term deferred taxes were recognized on the basis of an overall tax rate of 37.5 percent 

(2001: 38.0 percent). This comprises corporate income tax of 26.4 percent (2001: 26.4 percent), 

including the German unification solidarity surcharge, and an average municipal trade 

tax rate for German companies of 11.1 percent (2001: 11.6 percent). Short-term deferred 

taxes expected to be reversed in the next fiscal year are recognized at 38.8 percent (2001: 

38.0 percent) in the wake of the German Flood Disaster Solidarity Act. This calculation is 

based on a corporate income tax rate including German unification surcharge of 28.0 percent 

(2001: 26.4 percent) and an average municipal trade tax rate of 10.8 percent (2001: 11.6 percent). 

The average municipal tax rate for short-term deferred taxes differs from the rate for 

long-term deferred taxes, as the effect of setting off municipal tax against high-rate corporate 

income tax is correspondingly higher. As a result of tax rate changes in fiscal 2002 deferred 

tax assets came to 630 thousand euros (2001: zero). 

Foreign companies are calculated at their domestic corporate income tax rates.


The following table shows the transition from expected to recognized tax expenses. In order 

to calculate the expected tax burden, earnings before taxes are multiplied with the overall tax 

rate applicable for the fiscal year under review. 

2002 2001 


Group EBT 33,629 55,224 

Expected tax burden at tax rate of 37.5% (2001: 38.0%) 

Increase/reduction of taxes due to: 

12,611 20,985 

Differences in tax rates, non-German companies – 2,086 – 2,831 

Changes in tax rate – 630 0 

Non-deductible operating expenses 265 810 

Non-deductible amortization on investments 1,969 0 

Tax-free income – 984 – 790 

Taxes brought forward – 351 677 

Increase in valuation adjustment to deferred taxes 10,375 0 

Special effects on delimination of continued and 

discontinued operations – 6,533 – 7,145 

Special effects of deferred tax in Poland – 1,578 0 

Other 142 – 2,526 

Total tax burden 13,200 9,180 

As of December 31, 2002 the Group has loss carryforwards of 188,062 thousand euros (2001: 

45,826 thousand euros) for corporate income tax purposes and of 80,813 thousand euros 

(2001: 37,610 thousand euros) for domestic municipal trade tax purposes, as well as non-German 

loss carryforwards of 2,937 thousand euros (2001: 3,450 thousand euros). Under German 

tax law applicable at the balance sheet date, domestic losses can be carried forward without 

limit in time or amount. Of the non-German loss carryforwards, 2,937 thousand euros may be 

used until 2007. 

Valuation adjustments of 43,420 thousand euros (2001: zero) were made to deferred tax 

assets mainly for tax loss carryforwards where their realization is uncertain within a foreseeable 

period of time, based on the legal and financial situation or other information available to 

the Company. Depending on the Company’s earnings situation, current estimates on the 

recoverability of deferred tax assets may change in the years to come, necessitating higher or 

lower valuation adjustments.


Deferred tax assets and liabilities arising from differences in valuation of balance sheet items 

are as follows: 

Dec. 31, 2002 Dec. 31, 2001 


Intangible assets 10,512 12,535 


Financial assets 1,557 1,345 

Inventories 1,210 1,953 

Receivables 1,782 1,021 




Liabilities 5,095 6,832 

36,573 38,774 

Tax loss carryforwards 63,595 18,308 

100,168 57,082 

Valuation adjustments – 43,420 0 

Deferred tax assets 56,748 57,082 

Intangible assets 12,032 16,745 



Inventories 797 0 

Other assets 101 1,693 

Accruals for pensions 762 762 


Liabilities 55 62 

Other liabilities 360 464 

Deferred tax liabilities 56,785 62,771 

Net deferred tax liabilities 37 5,689

21. Pensions and similar 

obligations 


Summarized deferred tax assets and liabilities are shown as follows: 

Dec. 31, 2002 Dec. 31, 2001 


Deferred tax assets 

Short-term 8,702 7,023 

Long-term 

Deferred tax liabilties 

33,638 44,693 

Short-term 3,063 2,756 

Long-term 39,314 54,649 

Net deferred tax liabilities 37 5,689 

The total amount of deferred taxes stemming from matters not recorded directly in 

profits/losses in the fiscal year under review is 5,513 thousand euros (2001: 4,455 thousand 

euros). No deferred taxes were formed to cover differences from currency translations recognized 

without affecting income, arising from the consolidation of non-German affiliates. 

Information on market values led the Company to reduce assets of discontinued operations 

in fiscal 2000. Due to poor recoverability, resulting deferred tax assets had to be written 

off in full. 

Deferred taxes assets of 4,525 thousand euros were capitalized for changes from 

financial derivatives not affecting results. 

Deferred tax liabilities amounted to 988 thousand euros (2001: 1,195 thousand euros) 

from recognition of the adjustment item from pension valuations in the year under review. 

Pfleiderer grants eligible employees defined benefit obligations. Additionally, historical 

obligations exist from previous pension schemes covering retirement benefit, invalidity and 

dependants. Employer pension schemes were closed for new entrants by May 31, 1986. In 

some non-German companies, benefit-type obligations providing lump sums are also recognized 

under accruals for pensions. 

Accruals for pensions for the fiscal years ending December 31, 2001 and December 31, 

2002 were as follows: 

2002 2001 


Accrued pension liabilities 60,876 59,597 

Other benefit obligations 387 221 

Pension accruals 61,263 59,818


Payments from defined benefit plans depend on the length of service, age and salary of the 

employee. Costs and obligations resulting from defined benefit pension plans are calculated on 

the basis of actuarial appraisals using the projected unit credit method. This method sets the 

service period of the employee in relation to the date of valuation, and includes estimated 

future changes in salary. 

Expenses for pensions for the fiscal years ending December 31, 2001 and December 31, 2002 

were as follows: 

2002 2001 


Service cost 1,119 1,060 

Interest charges 3,407 3,303 

Amortization of actuarial profits (losses) 14 0 

Total 4,540 4,363 

The following table shows changes in benefit obligations recognized in the Consolidated 

Financial Statements for fiscal years ending December 31, 2001 and December 31, 2002: 

2002 2001 


Projected benefit obligation at beginning of year 62,205 55,229 

Service cost 1,119 1,060 

Interest cost 3,407 3,303 

Benefits paid (3,307) (3,312) 

Actuarial (profit)/loss (1,107) 5,827 

Retroactive plan amendments 358 0 

Disposals and transfers 670 98 

Projected benefit obligations at end of year 63,345 62,205 

Unrecognized actuarial profit (loss) (4,718) (5,838) 

Unrecognized charges from increases in benefits (341) 0 

Recognized amount 58,286 56,367 

The discount rates correspond approximately to the interest rate achievable from high-grade 

fixed interest securities with the same maturity period on the date on which the benefit obligation 

is calculated. This is 5.5 percent calculated for the Group (2001: 5.5 percent). Pension 

benefit obligationss are calculated on the basis of an salary increase of 3 percent p.a. (2001: 

2.8 percent).

V. Notes to Statement of Income 

1. Other operating income/ 

other operating expenses 

2. Net interest 


The following amounts are shown in the Consolidated Balance Sheet as of December 31, 2001 

and December 31, 2002: 

2002 2001 


Intangible assets 114 0 

Accrued pension expenses 60,876 59,597 

Accumulated changes in equity 2,476 3,230 

Net pension costs 58,286 56,367 

Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Other operating income 20,450 20,314 

Other operating expenses 18,484 15,442 

1,966 4,872 

Other operating income/other operating expenses includes income from insurance compensation 

(6,177 thousand euros/2001: 2,993 thousand euros). This relates mainly to insurance 

compensation for damage in the Wood-Based Panels segments amounting to 5.3 million euros 

following fire damage and production downtime at the Arnsberg and Neumarkt plants. Also included 

in these figures are insurance compensation for loss of trade receivables of 874 thousand 

euros (2001: 389 thousand euros) and expenses incurred from allocation to accruals for 

restructuring of 1,613 thousand euros. 

Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Income from other securities and long-term loans 126 110 

Other interest and similar income 2,868 5,539 

Interest and similar expenses 18,259 28,322 

– 15,265 – 22,673


VI. Notes to the Consolidated Statement of Cash Flows 

VII. Other Notes 

1. Commitments and 

contingencies 

Cash and cash equivalents examined in the Statement of Cash Flows corresponds to the balance 

sheet item “Cash and cash equivalents including securities classified as current assets”. 

Interest payments in fiscal 2002 came to 29,637 thousand euros. Payments made for 

taxes on income came to 16,608 thousand euros. 

Commitments and contingencies are shown below at nominal values: 

Sureties (bank guarantees) of 41,800 thousand euros have also been issued by banks in favor 

of customers, suppliers and other contractual partners of the Group, backed by corresponding 

guarantee lines. These are mainly sureties for warranties and guarantees in connection with 

contingent liabilities from divestitures. 

No accruals have been formed for the above-mentioned contingent liabilities as the 

probability that the risk will occur is considered very slight. 

The Group provides warranties for certain products (particularly masts). The amount of 

the potential warranties claims is based on the number of products sold and the records kept 

of past claims for these services. 

In the year under review, the accruals for warranties developed as follows: 

Dec. 31, 2002 Dec. 31, 2001 


Surities and letters of comfort 13.1 13.6 

Warranty commitments 4.5 0.6 

Contingencies from notes 1.9 0.4 

‘000 euros 

Initial volume as of January 1, 2002 4,190 

Warranties given during the reporting period 93 

Claims during reporting period 645 

Total as of December 31, 2002 3,638

2. Other financial obligations 

3. Litigation and claims 

4. Related party transactions 


The Group has concluded lease agreements on property, plant and equipment which do not 

qualify as capital leases, but are carried as operating leases under US GAAP. Additionally, the 

Group has entered into contracts for the maintenance of property, plant and equipment and 

for a diverse range of services. Expenses charged in the Statement of Income under rental and 

leasing agreements came to 30,398 thousand euros (2001: 25,366 thousand euros). 

The following tables shows future (non-discounted) minimum lease payments arising from 

contracts which cannot be cancelled and have an initial or residual term of more than one year 

as of December 31, 2002: 

‘000 euros 

2003 28,459 

2004 22,175 

2005 19,448 

2006 28,392 

2007 4,826 

After 2007 30,997 

Total 134,297 

The Group carried out sale and lease back transaction in fiscal 2001 in which co-generation 

and production plants were sold and then leased back under an operating lease. The total 

volume of these transactions was 65,509 thousand euros. 

As of December 31, 2002 the Company has commitments from orders amounting to 

57,952 thousand euros. 

The Company occasionally is involved in litigation during the course of its business. The Company 

is not aware of any events which could have a significant negative effect on its earnings, 

liquidity or financial position. 

Pfleiderer Unternehmensverwaltung GmbH & Co. KG has a substantial investment in Pfleiderer 

AG (affiliate company) and is thus a related party to the Group. Business relations existed 

in the previous fiscal year and the reporting year with this company and its affiliate Pfleiderer 

Leasing GmbH & Co. KG, Delitzsch. The extent of business relations in 2002 is summarized 

as follows: 

‘000 euros 

Interest income 1,365 

Interest expenses 991 

Income from allocation of costs 218 

Expenses from allocation of costs 27 

Rental expenses 1,182 

Dividend payment 6,012


VIII. Segment Reporting 

In the year under review, equipment from the administrative building in Neumarkt was sold by 

Pfleiderer Leasing GmbH & Co. KG, Delitzsch to Pfleiderer Leasing GmbH & Co., Neumarkt for 

2,300 thousand euros. 

Expenses for the supply of power by Pfleiderer Energietechnik Verwaltungs-GmbH, 

Neumarkt came to 19,132 thousand euros in fiscal 2002. 

As far as segment reporting in the sense of SFAS 131 is concerned (see Segment Report 

above before the Notes to the Consolidated Financial Statements), the Group operates in two 

areas (Business Centers), Wood-Based Panels and Infrastructure Technology. No longer reported 

are those activities which were sold in the current and previous fiscal years. These are the 

Insulation Technology and Doors and Windows Business Centers. The Wind Energy Business 

Unit shown under discontinued operations and two further business units belonging to the 

Wood-Based Panels Business Center are no longer shown in the Segment Report. 

Geographic Information 

Revenue by Region 

Revenues are divided among the regions as follows: 

Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Germany 530,508 540,618 

Other EU states 219,601 241,471 

Rest of Europe 187,493 171,316 

Other countries 90,830 88,590 

1,028,432 1,041,995 

Segment Assets by Region 

Segment assets are divided among the regions as follows: 

Dec. 31, 2002 Dec. 31, 2001 


Germany 361,576 411,909 

Other EU states 1,535 5,255 

Rest of Europe 159,965 194,773 

Other countries 39,624 51,764 

562,700 663,701

IX. Earnings per Ordinary Share 


The following table shows earnings per share: 

X. Compensation of Boards/Shares held by Members of Boards 

1. Executive Board 

2. Supervisory Board 

Year ending December 31, 

2002 2001 

Result net of minority interests ‘000 euros – 39,664 24,219 

Average number of shares in circulation shares 42,673,784 42,685,000 

Earnings per share euros – 0.93 0.57 

Result per share, continued operations euros 0.37 1.00 

Result per share, discontinued operations euros – 1.30 – 0.43 

Stock options granted to members of the Executive Board and employees did not dilute the 

result. 

Total remuneration paid to the members of the Executive Board in fiscal 2002 amounted to 

3,597 thousand euros (2001: 6,090 thousand euros). Remuneration paid for the year under 

review includes a variable incentive component of 585 thousand euros. 

Pension obligations to former members of the Executive Board and their dependants 

amounted to 2,966 thousand euros (2001: 2,952 thousand euros). Total payments to former 

members of the Executive Board amounted to 127 thousand euros in 2002. 

As part of its Stock Option Plan, Pfleiderer AG granted members of the Executive Board 

603,000 options to acquire Company stock against a personal investment contribution. This 

figure is net of options granted to former members of the Executive Board. Based on the 

amount of personal contributions made to the Stock Option Plan 2002, the Company plans to 

grant members of the Executive Board a further 466,092 options. Members of the Executive 

Board hold 54,060 shares (2001: 45,885). 

Remuneration paid to members of the Supervisory Board in fiscal 2002 amounted to 

151 thousand euros (2001:150 thousand euros). 

Members of the Supervisory Board hold a total of 77,224 shares (2001: 168,933 shares).


XI. Deviations in Accounting, Valuation and Disclosure Procedures under Sec. 292a HGB 

(“Handelsgesetzbuch”, German Commercial Code) 

1. Leasing 

2. Valuation of inventories 

In accordance with the exemption rule provided under Sec. 292a HGB, the Consolidated Financial 

Statements of Pfleiderer AG have been drawn up in compliance with the United States 

Generally Accepted Accounted Principles (US GAAP) in force on the balance sheet date. 

The main differences in accounting, valuation and consolidation under US GAAP compared 

to the German HGB rules are as follows: 

HGB does not rule explicitly how leasing transactions should be treated. When deciding how to 

account such transactions, German companies generally apply rules on leasing promulgated by 

their domestic taxation authorities. Applying tax criteria to leasing agreements has the effect 

that the leased asset is recognized in the balance sheet of the lessor. 

US GAAP provides extensive rules (in particular SFAS 13) on how leasing transactions 

should be dealt with. The central principle revolves around which of the parties carries the substantive 

risks and rewards associated with the leased asset, and can thus be regarded as its 

economic owner. This is the difference between capital lease and operating lease. As economic 

owner, the lessee must capitalize the leased asset, whereas this duty lies with the lessor 

when the transaction is regarded as an operating lease. 

Under HGB rules, inventories are valued as of the balance sheet date at the lower of cost or 

market, or at fair value. Fair value of raw materials, consumables and supplies is determined 

according to replacement price, and fair value of work in process and finished goods retrospectively 

from net selling prices obtained for the products in question. 

Under US GAAP, APB 43 also requires that inventories be valued at the lower of cost or 

market. However US GAAP differs from HGB for all types of inventories in the method used to 

determine the value of the asset, in particular taking into account both procurement price and 

the value at which the item can be sold. Where cost of replacement is lower than acquisition 

or production cost, inventories must be valued at the average of replacement cost, realizable 

net selling price and net selling price less normal operating margin. Net selling price less normal 

operating margin is the floor value, even when cost of replacement is lower. Raw materials, 

consumables and supplies are valued at the lower of replacement and acquisition cost, without 

taking into account the selling price.

3. Long-term investments 

and securities classified as 

current assets 

4. Derivative financial 

instruments 

5. Costs of capital procurement 

6. Stock options 

7. Currency translation 


HGB requires that securities be carried at the lower of amortized cost or fair value as of the 

balance sheet date. Under US GAAP, SFAS 115 rules that securities are valued by category. 

Securities available for sale, i.e. securities not held for trading purposes or until maturity, 

are marked to market at balance sheet date. Unrealized profits or losses are directly transferred 

to equity. Where unrealized losses are other than temporary, the security is amortized. 

The write-down cannot be reversed later through write-ups affecting net income. 

HGB has no binding procedures for accounting and valuing derivative financial instruments, 

with the effect that valuation takes account of the historical cost, realization and imparity 

principles. 

US GAAP, on the other hand, requires that all original and derivative financial instruments 

be measured at fair value. Under certain restrictive conditions, US GAAP requires that hedging 

be recognized on the balance sheet, which means that fluctuations in financial instruments 

used for hedging purposes are not directly shown as expenses or income, but must be temporarily 

recognized under equity. The criteria for recognition on the balance sheet include the 

underlying transaction secured and the type of financial instrument involved. Where the conditions 

for recognition are not fulfilled, fluctuations are shown as income or expenses in the 

income statement during the period in which they occur. 

Under German law, costs of capital procurement must be accounted as expenses and may not 

be offset against cash inflow arising from capital increases. Under US GAAP, costs of procuring 

equity, for example the issuing costs incurred for an IPO less the effect of their tax deductibility, 

may be deducted from the gross amount of capital procured, thus reducing additional paidin 

capital. 

There is no principal legal opinion in Germany as to how stock options granted to employees 

should be accounted. Under US GAAP, stock options are mainly dealt with by APB 25 and 

SFAS 123. Under APB 25, stock options are treated according to their intrinsic value, whereas 

in SFAS 123 they are recognized at fair value. The Company has decided to apply APB 25 for 

its stock options, the intrinsic value being the difference between the exercise price and the 

higher market share price at balance sheet date. 

Under HGB rules, foreign currency receivables and payables not covered by forward currency 

hedging are carried at the exchange rate on the date of transaction or the balance sheet date, 

whichever is more unfavorable. Under US GAAP rules, SFAS 52 requires that all foreign currency 

receivables and payables be translated at the exchange rate prevailing at balance sheet 

date, with the potential result that unrealized profits from exchange rates can affect profits 

and losses.


8. Deferred taxes 

9. Accounting for goodwill 

and impairment 

10. Discontinued operations 

According to HGB, deferred taxes must be calculated on all temporary differences resulting 

between the Company’s tax balance sheet and its consolidated balance sheet (timing concept), 

thereby applying the current corporate income tax rate. In this procedure, only deferred tax 

liabilities must be recognized, while the Company has the option – with certain exceptions – to 

capitalize deferred tax assets or not. No deferred taxes may be carried to cover quasi-permanent 

differences which are only reversed after a very long period of time, or following sale or 

winding up. The same applies to loss carryforwards. 

According to US GAAP, SFAS 109, deferred taxes are formed for valuation differences 

between the assets and liabilities on the tax balance sheet and those on the consolidated 

balance sheet, based on the statutory applicable tax rate at the end of the reporting period 

and expected tax rate applicable at the time of reversal. Deferred taxes must be carried for all 

temporary differences between tax values and carrying amounts in the consolidated balance 

sheet. Using this procedure, quasi-permanent differences are classified as temporary (temporary 

concept). This aside, deferred taxes must be formed for tax loss carryforwards. Deferred 

tax assets must also be examined at every balance sheet date for realizability and adjusted 

through valuation allowances where necessary. 

Under German commercial law, acquired goodwill must be capitalized and amortized over its 

average useful life. Where it results from purchase accounting, goodwill must be offset against 

equity at its full amount in the year of creation. Goodwill must be written down when, for example, 

the future earnings position of the company is unlikely to produce positive results. Under 

German commercial rules, the extraordinary amortization is considered justifiable in view of 

the prudence principle. 

Under US GAAP, goodwill is also capitalized, but scheduled amortization is no longer 

permitted. Instead, SFAS 142 states that goodwill must be subjected to an impairment test at 

least once a year, and its value adjusted where necessary. 

Sec. 246 (2) HGB states that expenses and income or assets and liabilities may not be offset 

against each other. This has the effect that discontinued operations cannot be shown separately 

in the financial statements. 

Under the US GAAP rules laid down in SFAS 144, on the other hand, the statement of 

income and the balance sheet must be adjusted for effects of discontinued operations. The adjusted 

figures must be summarized in a separate position as results in the statement of income 

and as assets and liabilities on the balance sheet.

11. Revenues 

XIII. Changes in Assets of the Group 


In principle, German accounting rules based on the HGB and GOB (“Grundsätze Ordentlicher 

Buchführung”, principles of proper accounting) demand that revenues only be realized after 

delivery and acceptance of the full order, i.e., at the earliest when contractual performance 

has been largely completed and any remaining risks are insignificant (“completed contract 

method”). This applies even when the completion of orders extends over a long period of time. 

Under US GAAP, on the other hand, revenues can be realized as completion of the order 

progresses, provided total revenues and costs, as well as the percentage of completion of 

the order can be calculated with reasonable reliability (“percentage of completion method”). 

The manner in which this is accounted is described in SOP 81-1 and in ARB 45. 

Changes in the long-lived assets of the Group are shown in the analysis of assets enclosed as 

annex to these notes. 

Neumarkt, March 2003 


Michael Ernst Dr. Jürgen Koch Hans H. Overdiek


Analysis of Group Assets 

I. Intangible Assets 

Acquisition or Production Costs 

As of Translation Change Additions Disposals Reclassi- As of 

Jan. 1, adjustments in con- fications Dec. 31, 

2002 solidated 

group 

2002 


1. Franchises, trademarks, patents 

and licences and similar rights 

and licences to such rights 31,176 – 278 0 2,746 3,214 2,683 33,113 

2. Goodwill 111,643 – 653 0 0 430 0 110,560 

3. Advance payments 3,818 0 0 2,948 0 – 2,708 4,058 

146,637 – 931 0 5,694 3,644 – 25 147,731 

II. Property, plant and equipment 

1. Land, land rights and 

buildings including buildings 

on third-party land 

2. Technical equipment and 

289,439 – 9,747 0 6,408 6,265 4,062 283,897 

machinery 

3. Other equipment, furniture 

717,038 – 31,402 56 8,727 59,880 12,828 647,367 

and fixture 

4. Payments on account and 

74,511 – 1,682 2 5,625 14,209 539 64,786 

construction in progress 19,104 – 491 0 17,498 1,285 – 17,404 17,422 

1,100,092 – 43,322 58 38,258 81,639 25 1,013,472 

III. Financial assets 

1. Investments in affiliated 

companies 2,711 0 – 4 553 0 0 3,260 

2. Investments 181 0 0 4 125 0 60 

3. Other loans 7,169 0 0 235 6,355 0 1,049 

10,061 0 – 4 792 6,480 0 4,369 

1,256,790 – 44,253 54 44,744 91,763 0 1,165,572

consolidated financial statements analysis of group assets pfleiderer ag 119 

Amortization/Depreciation Net Book Value 

As of Translation Change Additions Disposals Reclassi- As of As of As of 

Jan. 1, adjustments in con- fication Dec. 31, Dec. 31, Dec. 31, 

2002 solidated 

group 

2002 2002 2001 

‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros 

17,562 -266 0 9,978 3,127 1 24,148 8,965 13,614 

21,560 – 156 0 0 256 0 21,148 89,412 90,083 

0 0 0 0 0 0 0 4,058 3,818 

39,122 – 422 0 9,978 3,383 1 45,296 102,435 107,515 

102,862 – 3,150 0 9,446 4,503 421 105,076 178,821 186,577 

517,352 – 20,316 3 34,248 56,253 – 639 474,395 172,972 199,686 

61,447 – 1,322 0 5,075 13,706 217 51,711 13,075 13,064 

855 – 111 0 0 0 0 744 16,678 18,249 

682,516 – 24,899 3 48,769 74,462 – 1 631,926 381,546 417,576 

478 0 0 1,176 0 0 1,654 1,606 2,233 

0 0 0 0 0 0 0 60 181 

0 0 0 643 0 0 643 406 7,169 

478 0 0 1,819 0 0 2,297 2,072 9,583 

722,116 – 25,321 3 60,566 77,845 0 679,519 486,053 534,674


Balance sheets of discontinued operations as of December 31, 2002 (before consolidation) 

Assets Assets of Insulation Other 

Technology Business units 

Center to be executed (cumm.) 


Cash and cash equivalents 36 137 

Securities classified as current assets 0 0 

Trade receivables and other assets 87,486 16,350 

Inventories 336 14,315 

Deferred taxes 0 84 

Prepaid expenses 65 2 


Property, plant and equipment 2,009 785 

Intangible assets 11 0 




Long-lived assets 2,020 795 

Total assets 89,943 31,683 

Liabilties and stockholders’ equity Liabilities of Insulation Other 

Technology Business units 

Center to be executed (cumm.) 



Financial liabilities 45,442 27,829 

Short-term accruals 449 592 


Deferred income 0 10 


Long-term financial liabilities 0 1,821 

Accruals for pensions 0 2,213 



Other long-term accruals 812 102 


Minority interests 0 0 


Stockholders’ equity 31,168 – 6,275 

Total liabilities and stockholders’ equity 89,943 31,683 

This note is an integral part of the Consolidated Financial Statements.

consolidated financial statements balance sheets of discontinued operations pfleiderer ag 121 

Balance sheets of discontinued operations at December 31, 2001 (before consolidation) 

Assets Business Center Business Center Other 

Insulation Doors and units 

Technology Windows (cumm.) 


Cash and cash equivalents 4,906 558 172 

Securities classified as current assets 507 0 0 

Trade receivables and other assets 51,175 84,236 9,614 

Inventories 28,787 22,052 15,335 

Deferred taxes 382 96 0 

Prepaid expenses 372 17 2 

Current assets 86,129 106,959 25,123 

Property, plant and equipment 129,561 32,708 5,484 

Intangible assets 10,697 4,704 9,709 

Financial assets 197 51 4 

Deferred taxes 1,564 2,377 2,387 

Other assets 32 0 0 

Long-lived assets 142,051 39,840 17,584 

Total assets 228,180 146,799 42,707 

Liabilities and stockholders’ equity Business Center Business Center Other 

Insulation Doors and units 

Technology Windows (cumm.) 


Short-term liabilities 33,799 106,227 8,738 

Financial liabilities 172,501 69,654 14,732 

Short-term accruals 4,424 3,606 1,539 

Deferred taxes 0 322 0 

Deferred income 333 0 10 

Short-term liabilities 211,057 179,809 25,019 

Long-tem financial liabilities 0 8,000 1,991 

Accruals for pensions 718 2,496 2,834 

Deferred taxes 8,084 119 323 

Other liabilities 240 913 0 

Other long-term accruals 1,524 883 12 


Minority interests 3,676 – 329 0 

Long-term liabilities 14,242 12,082 5,160 

Stockholders’ equity 2,881 – 45,092 12,528 

Total liabilities and stockholders’ equity 228,180 146,799 42,707 

This note is an integral part of the Consolidated Financial Statements.


Audit Opinion 

We have audited the consolidated financial statements, comprising the balance sheet, the income 

statement and the statements of changes in shareholders’ equity and cash flows as well 

as the notes to the financial statements, prepared by Pfleiderer AG, Neumarkt, for the fiscal 

year from January 1 to December 31, 2002. The preparation and the content of the consolidated 

financial statements are the responsibility of the Company’s management. Our responsibility 

is to express an opinion whether the consolidated financial statements are in accordance 

with the US Generally Accepeted Accounting Standards (US GAAP), based on our audit. 

We have conducted our audit of the consolidated financial statements in accordance 

with the German audit regulations and the generally accepted German standards for the audit 

of financial statements promulgated by the IDW [“Institut der Wirtschaftsprüfer in Deutschland”: 

Institute of Public Auditors in Germany]. Those standards require that we plan and perform 

the audit such that it can be assessed with reasonable assurance whether the consolidated 

financial statements are free of material misstatement. Knowledge of the business activities 

and the economic and legal environment of the Group and evaluations of possible misstatements 

are taken into account in the determination of audit procedures. The effectiveness 

of the internal control system and the evidence supporting the amounts and disclosures in the 

consolidated financial statements are examined on a test basis within the framework of the 

audit. The audit includes assessing the accounting principles used and significant estimates 

made by management, as well as evaluating the overall presentation of the consolidated financial 

statements. We believe that our audit provides a reasonable basis for our opinion. 

In our opinion, the consolidated financial statements give a true and fair view of the net 

assets, financial position, results of operations and cash flows of the Group for the fiscal year 

in accordance with US GAAP.

consolidated financial statements concluding remarks and auditor’s opinion pfleiderer ag 123 

Our audit, which also extends to the combined management report prepared by the 

management board for the fiscal year from January 1 to December 31, 2002, has not led to 

any reservations. In opinion, on the whole the group management report together with the 

other disclosures in the consolidated financial statements provides a suitable understanding of 

the Group’s position and suitably presents the risks of future development. In addition, we 

confirm that the consolidated financial statements and the group management report for the 

fiscal year from January 1, 2002 to December 31, 2002 satisfy the conditions required for 

the Company’s exemption from its obligation to prepare consolidated financial statements and 

the group management report in accordance with German law. 

Stuttgart, March 11, 2003 

Ernst & Young 

Deutsche Allgemeine Treuhand AG 

Wirtschaftsprüfungsgesellschaft 

Graf von Treuberg Th. Müller 

Wirtschaftsprüfer Wirtschaftsprüfer 

(German Public Auditor) (German Public Auditor)


Consolidated Companies as of December 31, 2002 

Pfleiderer AG Neumarkt 

Business Center Wood-Based Panels 

Pfleiderer Holzwerkstoffe GmbH & Co. KG Neumarkt *) 100.00% 

Pfleiderer Holzwerkstoffe Verwaltungs-GmbH Neumarkt 100.00% 

Eltec Elemente-Technik für Möbel- und Innnenausbau GmbH Arnsberg 100.00% 

Fols Sp. z.o.o. Warschau (PL) 100.00% 

Interwood GmbH Regensburg 100.00% 

Pfleiderer B.V. Deventer (NL) 100.00% 

Pfleiderer Holzwerkstoffe GmbH Peiting 100.00% 

Pfleiderer Industry Limited Gerrads Cross (GB) 100.00% 

Pfleiderer Industrie Schweiz AG St. Gallen (CH) 100.00% 

Thermopal Dekorplatten GmbH & Co. KG Leutkirch *) 100.00% 

Thermopal GmbH Leutkirch 100.00% 

Wirus-Werke W. Ruhenstroth GmbH & Co. KG Gütersloh *) 100.00% 

Zaklady Plyt Wiorowych Prospan S.A. Wieruszow (PL) 48.61% 

Zaklady Plyt Wiorowych S.A. w. Grajewie Grajewo (PL) 85.65% 

Fideris Spanplatten AG St. Gallen (CH) 100.00% 

Duropal S.A.S. Reims (F) 100.00% 

Companies not consolidated: 

Duropal GmbH Neumarkt 100.00% 

Pfleiderer Holzwerkstoffe Vertriebs-GmbH Neumarkt 100.00% 

Wodego GmbH Neumarkt 100.00% 

Moralt Tischlerplatten Verwaltungs-GmbH Bad Tölz 100.00% 

Moralt Tischlerplatten GmbH & Co. KG Bad Tölz 100.00% 

Business Center Infrastructure Technology 

Pfleiderer Infrastrukturtechnik GmbH & Co. KG Neumarkt *) 100.00% 

Pfleiderer Infrastrukturtechnik Verwaltungs-GmbH Neumarkt 100.00% 

Betonschwellenwerk Coswig GmbH & Co. KG Coswig *) 100.00% 

Betonschwellenwerk Coswig Verwaltungs-GmbH Coswig 100.00% 

MULTIBRID Entwicklungsgesellschaft mbH Neumarkt 100.00% 

Newmark International Inc. Birmingham (USA) 100.00% 

PESA Telecom S.A. Constanti (Esp) 100.00% 

Pfleiderer Consulting GmbH Neumarkt 100.00% 

Pfleiderer Energietechnik Verwaltungs-GmbH Dinkelsbühl 100.00% 

Pfleiderer España S.A. Constanti (Esp) 100.00% 

Pfleiderer Lábatlani Vasbetonipari Rt. Lábatlan (H) 86.00% 

Pfleiderer Technika Infrastrukturalna Polska Sp. z.o.o. Warschau (PL) 100.00%

consolidated financial statements group consolidated companies pfleiderer ag 125 

Pfleiderer Windenergy GmbH Neumarkt 100.00% 

Travipos S.A. Constanti (Esp) 51.00% 

WINDTEC Anlagenerrichtungs- und Consulting GmbH Völkermarkt (A) 100.00% 

Travertec S.R.L. Brasov (RUM) 100.00% 

Pfleiderer Leasing USA Inc. 

Pfleiderer Infrastructure S.A.R.L. 

Wilmington (USA) 100.00% 

(formerly: Pannotrans S.A.R.L., Rambervillers) Lille (F) 100.00% 


Wayss & Freytag Gesellschaft für Unternehmensbeteiligungen 

mbH Frankfurt a. M. 100.00% 

German Track Systems GmbH Berlin 100.00% 

Other 

Jura Belgium BVBA Hoogstraaten (B) 100.00% 

JURA-Spedition GmbH & Co. KG Neumarkt *) 100.00% 

JURA-Spedition Verwaltungs-GmbH Neumarkt 100.00% 

Pfleiderer Finance B.V. Deventer (NL) 100.00% 

Pfleiderer Leasing GmbH & Co. Neumarkt *) 100.00% 

Pfleiderer Leasing Verwaltungs-GmbH Neumarkt 100.00% 

Pfleiderer Service GmbH Neumarkt 100.00% 

Pfleiderer Fenster Verwaltungs-GmbH Gütersloh 100.00% 

Pfleiderer Dämmstofftechnik International GmbH & Co. KG Neumarkt *) 100.00% 

Pfleiderer Dämmstofftechnik Verwaltungs-GmbH Neumarkt 100.00% 

Pfleiderer Dämmstofftechnik GmbH Neumarkt 100.00% 

Pfleiderer Insulation Holding GmbH Neumarkt 100.00% 


Jura Polska Sp. z.o.o. Dabrowa Gornicza (PL) 100.00% 

*) Companies opting out under Section 264b HGB


Pfleiderer AG Balance Sheet as of December 31, 2002 

Assets Notes Dec. 31, 2002 Dec. 31, 2001 

Fixed assets 


Property, plant and equipment 79 71 

Financial assets 298,518 375,795 

Current assets 

(1) 298,597 375,866 

Receivables and other assets 76,758 111,440 

Treasury stock 8 0 

Cheques, cash and bank balances 51,967 52,774 

(2) 128,733 164,214 

Total assets 427,330 540,080 

Stockholders’ equity and liabilities Notes Dec. 31, 2002 Dec. 31, 2001 

Stockholders’ equity 


Capital stock 109,274 109,274 

Capital reserve 10,927 201,503 

Revenue reserve 50,621 51,129 

Unappropriated profit 0 15,215 

Accruals 

(3) 170,822 377,121 



Liabilities 

(4) 20,490 22,301 


Other liabilities 215,179 76,243 

(5) 236,018 140,658 

Total stockholders’ equity and liabilities 427,330 540,080

Pfleiderer AG Statement of Income 2002 

financial statements of the legal entity pfleiderer ag pfleiderer ag 127 

Notes Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Income from investments in affiliated companies (9) 8,872 72,266 

Income from profit transfer agreements (9) 0 139 

Expenses from the absorption of losses from 

affiliated companies (9) – 15,025 0 

-6,153 72,405 

Income from other securities and long-term loans (10) 206 206 

Other interest and similar income (10) 11,367 14,058 

Interest and similar expenses (10) – 12,625 – 13,656 

– 1,052 608 

Holding performance – 7,205 73,013 

Other operating income (11) 25,413 24,447 

Personnel expenses (12) – 8,495 – 10,435 

Amortization and depreciation – 19 – 15 

Other operating expenses (13) – 33,140 – 29,740 

Results from ordinary business activity – 23,446 57,270 

Extraordinary expenses (14) – 178,317 – 55,000 

Taxes on income (15) 4,000 3,085 

Net income – 197,763 5,355 

Addition to retained earnings 6,679 9,860 

Withdrawal from capital reserve 190,576 0 

Withdrawal from revenue reserve 508 0 

Unappropriated profit 0 15,215


Analysis of Fixed Assets of Pfleiderer AG from January 1 to December 31, 2002 

I. Property, plant and equipment 

Acquisition or Production Costs 

Jan. 1, 2002 Reclassi- Additions Disposals Dec. 31, 2002 

fications 

‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros 

Other property, furniture and fixtures 78 0 27 3 102 

78 0 27 3 102 

II. Financial assets 

1. Investments in affiliated companies 355,444 0 0 6,263 349,181 

2. Loans to affiliated companies 20,286 0 0 0 20,286 

3. Investments 55 0 0 4 51 

4. Other loans 10 0 0 10 0 

375,795 0 0 6,277 369,518 

375,873 0 27 6,280 369,620

financial statements of the legal entity pfleiderer ag pfleiderer ag 129 

Accumulated Depreciation Net Book Value 

Jan. 1, 2002 Reclassi- Additions Disposals Dec. 31, 2002 Dec. 31, 2002 Dec. 31, 2001 

fications 


7 0 19 3 23 79 71 

7 0 19 3 23 79 71 

0 0 71,000 0 71,000 278,181 355,444 

0 0 0 0 0 20,286 20,286 

0 0 0 0 0 51 55 

0 0 0 0 0 0 10 

0 0 71,000 0 71,000 298,518 375,795 

7 0 71,019 3 71,023 298,597 375,866


Pfleiderer Aktiengesellschaft, Neumarkt, Notes to Financial Statements for Fiscal 2002 

I. General information 

II. Currency translation 

The Annual Financial Statements of Pfleiderer AG have been prepared in accordance with the 

requirements of the German Commercial Code (HGB) and the German Stock Corporation Act 

(AktG). 

The Annual Financial Statements of Pfleiderer AG are shown in thousand euros. The 

previous year’s figures have been taken from the Annual Financial Statements of Pfleiderer AG 

as of 31 December 2000. 

The Income Statement has been drawn up using the cost-summary method. All information 

that has to be disclosed in the Balance Sheet or Income Statement is included in these 

corporate notes, including such that can alternatively be stated in the notes. For greater clarity, 

individual positions in the Balance Sheet and the Income Statement have been summarized 

and are explained in these notes. 

Due to Pfleiderer AG’s holding function, the composition of the Annual Financial Statements 

differs from that laid down in Sec. 275 (2) HGB (“Handelsgesetzbuch”: German Commercial 

Code). 

Pfleiderer AG is obliged to prepare consolidated financial statements. The Company applies 

the exemption rule of Sec. 292a HGB and draws up consolidated financial statements in 

accordance with the United States Generally Accepted Accounting Principles, known for short 

as “US GAAP”. The annual consolidated financial statements of Pfleiderer AG are included in 

the Financial Statements of Pfleiderer Unternehmensverwaltung GmbH, Nuremberg. The 

Financial Statements have been deposited with the Commercial Register of the District Court 

(Amtsgericht) Nuremberg. 

Pfleiderer Unternehmensverwaltung GmbH & Co KG has a majority shareholding in 

Pfleiderer AG. 

Foreign currency amounts which have not been hedged are shown at cut-off date according 

to the lower of cost or market principle for accounts receivable and highest value for accounts 

payable, as well as taking into account any need to reinstate original values. The official 

exchange rates of the main currencies used by Pfleiderer AG were as follows: 

Average rate at cut-off date Dec. 31, 2002 Dec. 31, 2001 

1 euro = 1 euro = 

Great Britain (GBP) 0.6505 0.6088 

Poland (PLN) 4.0329 3.5068 

Switzerland (CHF) 1.4527 1.4805 

Czech Republic (CZK) 31.5200 31.9900 

USA (USD) 1.0477 0.8820

III. Principles of Accounting and Valuation 

financial statements of the legal entity pfleiderer ag notes pfleiderer ag 131 

Property, plant and equipment is carried at acquisition or production cost, less scheduled 

and extraordinary depreciation and investment grants received. No investment grants were 

received in 2002. 

Scheduled depreciation for property, plant and equipment is applied mainly using the declining 

balance method based on the useful life of the asset in question, as defined by German 

tax law. The useful life of additions to property, plant and equipment is determined according 

to the depreciation tables issued for purposes of taxation by the German Federal Ministry of 

Finance as from January 1, 2001. Additions made in the first six months of the fiscal year to 

movable property, plant and equipment are depreciated by their full yearly amount, while additions 

recorded in the second half of the fiscal year are depreciated at half their full yearly 

amount of depreciation. Low-value assets are fully written off in the year of acquisition and are 

shown as retired. No depreciations pursuant to Sec. 254 HGB were made during the year 

under review. 

Financial assets are carried at the lower of cost or market. 

Accounts receivable and other assets are generally carried at nominal value. In individual 

cases, recognizable risks are covered by individual valuation adjustments, while the general 

credit risk is sufficiently covered through a lump-sum adjustment. 

Accruals for pensions and other obligations are carried at the actuarial value pursuant 

to Sec. 6a EStG (“Einkommenssteuergesetz”: German Income Tax Act) and are based on an 

interest rate of 6 percent. The calculations are based on the actuarial tables drawn up by 

Dr. Klaus Heubeck in 1998. 

Accruals for taxes and other accruals have been calculated and appropriately set up to 

cover all recognizable risks to the extent expected. 

Liabilities are carried at their repayment amounts.


IV. Notes to Balance Sheet 

(1) Assets Dec. 31, 2002 Dec. 31, 2001 

Property, plant and equipment 

Changes in assets during fiscal 2002 are shown in the analysis of fixed assets. 


Other equipment, furniture and fixtures 79 71 

79 71 

Financial assets 

Shares in affiliated companies 278,181 355,444 

Loans to affiliated companies 20,286 20,286 

Investments 51 55 

Other loans 0 10 

298,518 375,795 

Total 298,597 375,866 

Financial assets 

The valuation of the participating interest in Pfleiderer Dämmstofftechnik International GmbH & 

Co. KG was adjusted by 71 million euros following the sale of the operations to Uralita S.A., 

Madrid, Spain. The participating interest in Pfleiderer Bauelemente GmbH & Co. KG, including 

its affiliates, was sold to Vest-Wood A/S, Logstor, Denmark during fiscal 2002. 

Participating interests are shown in a separate list deposited with the Commercial Register 

of the District Court of Nuremberg.

(2) Current assets 

(3) Stockholders’ equity 


Receivables and other assets 

Treasury stock 

2,655 treasury shares were held as of December 31, 2002 as part of the stock option scheme. 

The amount held was 6,796.80 euros, which corresponds to 0.006 percent of equity. The 

shares were acquired on January 22, 2002. 

Other assets 

Dec. 31, 2002 Dec. 31, 2001 


Trade accounts receivables 156 172 

Accounts receivable from affiliated companies 37,765 93,621 

Other assets 38,837 17,647 

76,758 111,440 

Treasury stock 8 0 

Cheques, cash and bank balances 51,967 52,774 

128,733 164,214 

Dec. 31, 2002 Dec. 31, 2001 


Corporate income tax and other tax credits 18,359 17,003 

Other 20,478 664 

38,837 17,667 

Of the other assets carried in the financial statements of Pfleiderer AG, 525 thousand euros 

mature in later than one year. This also includes a receivable from the sale of the fixed and 

current assets of Pfleiderer Dämmstofftechnik International GmbH & Co. KG and its participating 

interests (Insulation Technology Business Center) to die Uralita S.A., Madrid, Spain. 

Capital stock 

Capital stock remains unchanged at 109,273,600.00 euros divided into 42,685,000 shares. 

On July 10, 2001 the Annual General Meeting of the Company authorized the Executive Board, 

up to June 30, 2006 and subject to approval by the Supervisory Board, to issue new shares in 

exchange for cash contributions in one or more issues to a total of 51,200 thousand euros 

(authorized capital). 

Additionally, conditional capital of 20,480 thousand euros is also available that can be 

issued until June 30, 2006. 

In connection with Pfleiderer AG’s stock option scheme, additional conditional capital 

amounting to 10,927 thousand euros has been set up.


Capital reserve 

In order to balance the net loss for the year, 190,575,717.34 euros were taken from capital 

reserve. 

Revenue reserve 

In order to balance the net loss for the year, 508,163.64 euros were taken from revenue 

reserve. Revenue reserve for treasury stock amounting to 7,566.75 euros were formed for 

treasury stock held as part of the stock option scheme. 

Dividends 

The Annual General Meeting on July 2, 2002 resolved to pay a dividend of 0.20 euro per share 

for 2001 and to carry forward the remaining 6,679 thousand euros. 

In order to avoid an accumulated deficit, the Executive Board proposed to the Supervisory 

Board that withdrawals be made from additional paid-in capital and retained earnings, 

and that no dividend be paid in accordance with Sec. 150 AktG (“Aktiengesetz”: German Stock 

Corporation Act). Sec. 150 AktG prohibits payment of a dividend from retained earnings when 

additional paid-in capital is used to compensate for an accumulated deficit. The Supervisory 

Board voted in favor of the proposal made by the Executive Board. 

Changes in stockholders’ equity 

Dec. 31, 2002 Dec. 31, 2001 


1. Statutory reserves 0 0 

2. Reserves for treasury stock 8 0 

3. Other retained earnings 50,613 51,129 

50,621 51,129 

Capital Additional Retained Unappropri- Total 

stock paid-in capital earnings ated profits 

‘000 euros ‘000 euros ‘000 euros ‘000 euros ‘000 euros 

As of January 1, 2002 109,274 201,503 51,129 15,215 377,121 

Dividend – 8,537 – 8,537 

Net loss for the year 

Use of additional paid-in capital and retained earnings 

– 197,762 – 197,762 

to balance accumulated deficit – 190,576 – 508 191,084 0 

As of December 31, 2002 109,274 10,927 50,621 0 170,822

(4) Accruals 


Dec. 31, 2002 Dec. 31, 2001 



Accruals for taxes 5,697 9,697 


20,490 22,301 

Accruals cover all recognizable risks as of the balance sheet date. 

Accruals for pensions and similar obligations 

Accruals for pensions and similar obligations mainly comprise individual commitments based 

on company agreements. 

Accruals for taxes 

Accruals for taxes include provisions made for taxes on income such as corporate income tax, 

including the German unification solidarity surcharge and municipal trade tax. 

The prior-year statements show deferred tax liabilities of 4,000 thousand euros. These 

were to be released in 2002. 

Other accruals 

Dec. 31, 2002 Dec. 31, 2001 


Sureties 4,400 0 

Personnel 1,419 4,270 

Other 2,773 2,182 

8,592 6,452 

An accrual of 4,400 thousand euros was formed to cover risk from a possible claim on a surety 

issued in favor of an affiliated company. 

Accruals for personnel mainly include accruals for bonuses. 

Other accruals cover diverse risks (annual report costs, forward foreign exchange deals), 

accruals for outstanding invoices (consulting services, other services not yet settled), as well 

as accruals for uncertain legal situations and obligations to third parties.


(5) Liabilities Dec. 31, 2002 Dec. 31, 2001 

(6) Contingent liabilities 

(7) Other financial obligations 

(8) Derivative financial 

instruments 


Liabilities to banks 20,839 64,415 


Trade accounts payable 6,610 511 

Liabilities to affiliated companies 208,238 71,451 

Liabilities to companies, in which investments are held 0 3,985 


of which for taxes (150) (101) 

of which for social contributions (39) (41) 

Other liabilities 215,179 76,243 

236,018 140,658 

The liabilities mature within one year at maximum. 

The significant increase in liabilities to affiliated companies is due to refinancing 

following losses incurred from the sales of Pfleiderer Bauelemente GmbH & Co. KG and of the 

operative business of Pfleiderer Dämmstofftechnik International GmbH & Co. KG. As of 

December 31, 2002, liabilities to affiliated companies comprised 208.1 million euros from 

financing (2001: 71.3 million euros). 

Pfleiderer AG is liable for bills of exchange totaling 119 thousand euros. 

Pfleiderer AG has assumed sureties and letters of comfort amounting to 370.6 million 

euros. 

Pfleiderer AG has assumed a guarantee for interest swap transactions concluded by 

subsidiaries. The interest swaps are based on collaterals totaling 107.9 million euros. 

Pfleiderer AG has assumed liabilities from warranties totaling 6.4 million euros. 

Obligations from lease and rent agreements concluded by Pfleiderer AG were valued at 

0.3 million euros (annual amount) as of cut-off date. 

Derivative instruments were only used by Pfleiderer AG to secure risks from currency and 

interest items arising from operative business, and were based on the underlying transaction. 

Accruals of 128 thousand euros were formed to cover expected exchange rate losses from 

the purchase of 6 million US dollars (5.7 million euros at the balance sheet date). Unrealized 

profits from the sale of GBP and CHF were not charged to the subsequent accounting year 

(7.1 million euros as of balance sheet date/profit of 63 thousand euros).

V. Notes to Statement of Income 


(9) Results from investments Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Income from investments in affiliated companies 8,872 72,266 

Income from profit transfers agreements 0 139 

8,872 72,405 

Expenses from the absorption of losses from 

affiliated companies 15,025 0 

15,025 0 

Results from investments – 6,153 72,405 

(10) Net interest Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Income from other securities and long-term loans 206 206 

of which from affiliated companies (206) (206) 

Other interest and similar income 11,367 14,058 

of which from affiliated companies (9,493) (11,613) 

Interest and similar expenses 12,625 13,656 

of which from affiliated companies (9,334) (9,053) 

Net interest – 1,052 608


(11) Other operating income Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Administration 0 4 

Income not relating to accounting period 407 516 

Income from currency exchange 808 1,376 

Other 24,198 22,551 

25,413 24,447 

Income not relating to the accounting period relates in particular to income from the reversal 

of accruals and from payments for damage. 

Also included under other operating income for Pfleiderer AG are amounts from intercompany 

transactions. A total of 19,152 thousand euros (2001: 12,812 thousand euros) from 

charges for electricity purchased from Pfleiderer Energietechnik Verwaltungs GmbH was 

passed on to affiliated companies. 

(12) Personnel expenses Personnel expenses Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Wages and salaries 7,285 9,141 

Social security, pension and other benefit costs 1,210 1,294 

of which for pensions (918) (916) 

8,495 10,435 

Number of employees (annual average) Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 

Salaried employees 32 37 

of which part-time 0 2 

32 37 

Number of employees as of balance sheet date Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 

Salaried employees 34 37 

of which part-time 0 2 

34 37


(13) Other operating expenses Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Maintenance 12 151 

Administration 5,233 10,522 

(14) Extraordinary expenses 

Personnel 550 1,229 

Sales 185 189 

Other taxes 2 411 

Other 27,158 17,238 

33,140 29,740 

Other operating expenses includes expenses of 19,132 thousand euros (2001: 12,812 thousand 

euros) from charges for electricity purchased from Pfleiderer Energietechnik Verwaltungs 

GmbH passed on to affiliated companies 

The extraordinary result of –178,317 thousand euros relates to expenses from the sale of the 

operative business of the Insulation Technology Business Center and from the sale of Pfleiderer 

Bauelemente GmbH & Co. KG. In detail, these are expenses of 71 million euros from the 

Insulation Technology Business Center (amortization on financial assets) and 90.1 million euros 

of direct expenses from the sale of Pfleiderer Bauelemente GmbH & Co. KG as well as expenses 

for consultancy services and charges incurred from termination fees. 

(15) Taxes on income Jan. 1 – Jan. 1 – 

Dec. 31, 2002 Dec. 31, 2001 


Current taxes income 

Domestic corporate income and solidarity surcharge 0 – 3,085 

Reversal of accruals for deferred taxes – 4,000 0 

– 4,000 – 3,085 

The reimbursement of corporate income tax for Pfleiderer AG in 2001 relates to previous 

accounting periods.


VI. Other Information 

VII. Company Boards 

1. Compensation of present and former corporate management and supervisory bodies 

Payments made to the Supervisory Board came to 151 thousand euros during the fiscal year. 

Compensation of the Executive Board, including those members who left during the fiscal year 

under review, came to 3,597 thousand euros. This includes a variable amount of 585 thousand 

euros. 

Sufficient accruals for pensions of former members of the Executive Board and their 

dependents have been set up, amounting to 2,419 thousand euros as of December 31, 2002 

(2001: 2,406 thousand euros). Total compensation to former members of the Executive Board 

in 2002 came to 127 thousand euros. 

As part of the Pfleiderer AG stock option scheme, excluding options to former members 

of the Executive Board, members of the Executive Board were granted 603,000 share options 

against contribution of a personal investment in the Company. 

Based on personal investments paid in to the stock option scheme for 2002, a further 

466,092 options have been planned for members of the Executive Board. Members of the 

Executive Board hold 54,060 shares (2001: 45,885). Members of the Supervisory Board hold 

77,224 shares (2001: 168,933 shares). 

2. Corporate Governance 

In accordance with Sec.161 Aktiengesetz, the Executive Board and Supervisory Board of 

Pfleiderer AG published a declaration of compliance in December 20002 regarding the recommendations 

of the German Corporate Governance Code for corporate management and 

supervision. 

1. Additional board memberships held by members of the Supervisory Board 

of Pfleiderer AG 

Ernst-Herbert Pfleiderer 

Chairman of the Supervisory Board 

Member of the following comparable German advisory board: 

Advisory board of Pfleiderer Unternehmensverwaltung GmbH & Co. KG, Neumarkt (Chairman) 

Wolfgang Rhode* 

1st Deputy Chairman of the Supervisory Board 

Executive member of the managing board of IG Metall


Dr. Manfred Scholz 

2nd Deputy Chairman of the Supervisory Board 

Managing director, Haindl Papier GmbH, Augsburg until November 30, 2001 

Managing director, Augsburg Airways GmbH & Co. KG, Augsburg, since April 2002 

Member of the supervisory boards in the following companies: 

ASSTEL Lebensversicherung AG, Cologne (Chairman) 

Württembergische Hypothekenbank AG, Stuttgart 

Drei Mohren AG, Augsburg 

Gothaer Lebensversicherung AG, Göttingen (Chairman) 

Gothaer Versicherungsbank VvaG, Cologne 

Gothaer Finanzholding AG, Cologne 

DIC Deutsche Investor’s Capital Holding 

Westfalenbank AG, Bochum (Chairman) 


Advisory board of Pfleiderer Unternehmensverwaltung GmbH & Co. KG, Neumarkt 

(Deputy-Chairman) 

N. Erich Gerlach 

Business Consultant 



Reinhard Hahn* (from July 2, 2002) 

Trade Union Secretary, managing board of IG-Metall, Frankfurt am Main 

Gregor Haupeltshofer* (until July 2, 2002) 

Training Supervisor, production 

Frank Kratzsch* 

Chairman, Works Council of Pfleiderer Holzwerkstoffe GmbH & Co. KG, Business Unit Duropal 

Hans Theodor Pfleiderer 

Member of the executive board of P&V Holding Aktiengesellschaft, Vienna 



Siegfried Pirzer* (until July 2, 2002) 

Construction Supervisor, Services 

* Elected by the employees


Johann Schredl* (until July 2, 2002) 

District Secretary, IG Metall, Bavarian District 

Hanno C. Fiedler (from July 2, 2002) 

Chairman of the managing board of Ball Packaging Europe GmbH, Ratingen, previously 

Schmalbach-Lubeca AG, Ratingen 

Member of executive board of Impress Metal Packaging Holdings B.V., Amsterdam 

Executive Vice President of Ball Corporation, Bromfield, Colo, USA, since December 2002 



(from July 2, 2002) 

Member of the supervisory boards in the following companies: 

Thyssen Krupp Stahl AG, Duisburg 

Duales System Deutschland AG, Cologne 

Howaldtswerke-Deutsche Werft AG, Kiel 

Dr. Hanns-Helge Stechl (until July 2, 2002) 

Member of the supervisory board of the following company: 

MAN AG, Munich 



(until July 2, 2002) 

Robert J. Koehler (from July 2, 2002) 

Chief Executive Officer of SGL Carbon AG, Wiesbaden 

Member of the supervisory board of the following company: 

Benteler AG, Paderborn (Chairman) 

Wacker Chemie GmbH, Munich 



(from July 2, 2002) 

Moeller Holding GmbH & Co. KG, Bonn, member of the shareholders’ committee 

New Russia Fund, ING-Barings, (GB) member of the supervisory board 

Rainer Stracke* 

Plant Manager 

Manfred Schmidt* (from July 2, 2002) 

Works Council Chairman, Pfleiderer Holzwerkstoffe GmbH & Co. KG, Neumarkt


Josef Rugge-Fechtelpeter* (from July 2, 2002) 

Works Council Chairman Pfleiderer Holzwerkstoffe GmbH & Co. KG, Rheda plant 

Chairman of Central Works Council Wood-Based Panels 

Horst Weitzmann (until July 2, 2002) 

Chairman of the Executive Board of Südweststahl GmbH, Kehl am Rhein 

Member of the supervisory board of the following companies: 

PHB Weserhütte Aktiengesellschaft, Eberach (Chairman) 

BCT Technology AG, Willstätt (Chairman) 



(until July 2, 2002) 

2. Additional board memberships held by members of the Executive Board 


Chairman of the Executive Board, 

Doors and Windows until Oct. 31, 2002 

Infrastructure Technology from May 7, 2002 

Member of the Advisory board of Pfleiderer Unternehmensverwaltung GmbH & Co. KG, 

Neumarkt 

Member of the following foreign advisory boards: 

Windtec Anlagenerrichtungs- und Consulting GmbH, Völkermarkt, Austria 

Pfleiderer Finance B.V., Deventer, The Netherlands 

Pfleiderer Industry Ltd., Gerrards Court/Buckinghamshire, U.K. 

Zaklady Plyt Wiórowych PROSPAN S.A., Wieruszow, Poland 

Zaklady Plyt Wiórowych S.A. w. Grajewie, Grajwo, Poland 

Michael Ernst 


Personnel, Risk Management, Legal Affairs 

Vereinigung der Bayerischen Wirtschaft, Munich (member of the executive board) 

Member of the supervisory board of the following companies: 

Incon AG, Taunusstein (from October 11, 2002) 




* Elected by the employees


Dr. Jürgen Koch 


Finance 


Neumarkt 




Zaklady Plyt Wiórowych S.A, w. Grajewie, Grajwo, Poland 

Hans H. Overdiek 




Neumarkt 



Pfleiderer B.V., Deventer, The Netherlands 

Pfleiderer Industry Ltd., Gerrards Court/Buckinghamshire, U.K. 

Dr. Wolfgang Pinegger 

Member of the Executive Board until May 7, 2002 



Member of the following domestic advisory boards: 

Advisory board of Dachser GmbH & Co. KG, Munich 

Windtec Anlagenerrichtungs- und Consulting GmbH, Völkermarkt, Austria (until May 7, 2002) 

Pfleiderer Finance B.V., Deventer, The Netherlands (until May 7, 2002) 

Neumarkt, February 24, 2003 


Michael Ernst Dr. Jürgen Koch Hans H. Overdiek

Audit Opinion 

financial statements of the legal entity pfleiderer ag notes/ 

concluding remarks and auditor’s opinion 

pfleiderer ag 145 

We have audited the annual financial statements, together with the bookkeeping system and 

the management report of the Company and the Group of Pfleiderer Aktiengesellschaft, 

Neumarkt, for the fiscal year from January 1 to December 31, 2002. The maintenance of books 

and records and the preparation of the annual financial statements and the management 

report in accordance with German commercial law are the responsibility of the Company’s 

management. Our responsibility is to express an opinion on the annual financial statements, 

together with the bookkeeping system, and the management report based on our audit. 

We have conducted our audit of the annual financial statements in accordance with Sec. 

317 HGB (“Handelsgesetzbuch”: German Commercial Code) and the German generally accepted 

standards for the audit of financial statements promulgated by the Institut der Wirtschaftsprüfer 

in Deutschland (IDW). Those standards require that we plan and perform the audit such 

that misstatements materially affecting the presentation of the net assets, financial position 

and results of operations in the annual financial statements in accordance with German principles 

of proper accounting and in the management report are detected with reasonable assurance. 

Knowledge of the business activities and the economic and legal environment of the 

Company and evaluations of possible misstatements are taken into account in the determination 

of audit procedures. The effectiveness of the internal control system and the evidence 

supporting the carrying values and the disclosures in the books and records, the annual financial 

statements and the management report are examined primarily on a test basis within 

the framework of the audit. The audit includes assessing the accounting principles used and 

significant estimates made by management, as well as evaluating the overall presentation of 

the annual financial statements and management report. We believe that our audit provides 

a reasonable basis for our opinion. 

Our audit has not led to any reservations. 

In our opinion, the annual financial statements give a true and fair view of the net 

assets, financial position and results of operations of the Company in accordance with German 

principles of proper accounting. On the whole, the management report provides a suitable 

understanding of the Company’s and Group’s position and suitably presents the risks to future 

development. 

Stuttgart, March 11, 2003 

Ernst & Young 

Deutsche Allgemeine Treuhand AG 

Wirtschaftsprüfungsgesellschaft 

Graf von Treuberg Th. Müller 

Wirtschaftsprüfer Wirtschaftsprüfer 

(German Public Auditor) (German Public Auditor)


technical glossary 

■ carrier materials 

Wood-based materials which serve as the 

base for decorative surface materials 

(HPL, direct-coated wood materials, veneer). 

The preferred materials are unrefined 

particleboard and MDF. 

■ combined heat-power plant 

Also known as a co-generation plant: a decentralized 

plant for generating energy which 

Pfleiderer uses for supplying electricity and 

process heat, particularly for the production 

of wood-based panels (Pfleiderer’s “Central 

Energy Unit”). 

■ concrete masts 

Very strong masts used preferably for 

supporting mobile phone aerials, as well as 

for lighting, current conductors and aerial 

lines as well as high signs. 

■ contipress 

A twin band press for the continuous production 

of particleboard, MDF or laminated 

board. 

■ dbs 

A direct coating system for surface finishing 

of wood-based panels. 

■ eeg 

The German Act on Renewable Energy 

(“Erneuerbare-Energie-Gesetz”) with which 

the Federal Government aims to promote 

the use of alternative energies. The supply of 

electricity to the public grid generated from 

wind power, solar energy or biomass is 

promoted by the EEG with various levels of 

subsidy. 

■ grp mast 

Glass fibre-reinforced plastic mast which 

combines low weight with high flexural 

strength. Preferred use for lamp-posts, traffic 

light masts and flag poles or for special 

telecommunications solutions. 

■ gsm 

Global System for mobile Communication: 

the current worldwide standard in use for 

mobile radio technology. 

■ hpl 

High pressure laminate: a surface for woodbased 

panels made of plastic. 

■ iso 

International Standardization Organization: 

voluntary international association of 

national standardization committees with the 

aim of developing uniform standards valid 

worldwide. The Quality Management division 

pioneered it in Germany. 

■ mdf 

Medium density fibreboard: consists of wood 

fibres impregnated with glue and subjected 

to heat under pressure; one particular use is 

for three-dimensionally constructed furniture 

fronts. 

■ onshore/offshore plants 

Wind energy plants for sites on land 

(onshore) or at sea (offshore). Pfleiderer is 

developing offshore plants using its 

MULTIBRID ® technology. 

■ renewable energy 

Use of natural energy sources which are 

regenerative, making them available in 

unlimited supply, e.g. sun, wind, geothermal 

energy. 

■ solid track 

Rail track construction with load-bearing 

layer of asphalt or concrete and concrete 

sleepers laid directly in concrete bedding 

instead of on ballast. Giving high track stability 

and low maintenance, this system is 

preferred for high-speed links. 

■ surface-finished board 

Wood-based panels with a decorative 

surface. The surface may consist of various 

materials, for instance plastic, manufactured 

from pressed and laminated decorative 

paper. 

■ thermohydrolytic separation 

method 

A technically sophisticated process for 

recycling used timber by the application of 

moisture and heat that does not harm the 

environment. The goal is to split the used 

timber into fractions that can be recycled for 

their materials. 

■ turnkey service 

Delivery of a complete system. Example: 

Pfleiderer not only builds the transmission 

mast, but also acquires the land, provides 

and assembles the mobile phone technology 

and later on maintains the station. 

■ umts 

Universal Mobile Telecommunications 

System: a 3rd generation system of radio 

data transmission. 2 MBit/s data rates have 

been defined as the UMTS standard. These 

high data transfer rates open up new 

possibilities for users, such as e-commerce 

and mobile multimedia applications.

economic glossary 

■ capital employed 

The entire capital employed in the company, 

i.e. fixed assets plus current assets less provisions 

(excluding provisions for pensions), 

and liabilities (excluding financial liabilities). 

■ cash flow 

A measure used when analyzing balance 

sheets, companies and shares in order to 

assess a company’s financial strength and 

profitability. The cash flow defines the inflow 

of liquid funds to a company from sales and 

other sources over a certain period. 

■ discontinued operations 

According to US GAAP Business segments 

which are forseen to be sold are separately 

shown under “discontinued operations” in 

the income statement and balance sheet. 

■ ebit 

Earnings before interest and taxes. 

■ ebitda 

Earnings before interest, taxes, depreciation 

and amortization. 

■ eps 

Earnings per share: consolidated earnings 

divided by the weighted number of shares. 

in brief glossary pfleiderer ag 147 

■ ebt 

Earnings before taxes. 

■ eva 

Economic value added: the difference 

between the return achieved by the company 

on the assets employed and the capital 

costs; capital employed x WACC. 

■ kontrag 

The law for control and transparency in the 

corporate sector, KonTraG, was adopted by 

the Bundesrat on March 27, 1998 and aims 

to improve corporate control. 

■ long-term incentive scheme 

A motivation scheme geared to the long 

term to encourage staff loyalty, incorporating 

schemes to allow employees a share in the 

success of the company. 

■ roce 

Return on capital employed. 

■ short financial year 

Pfleiderer altered its financial year to coincide 

with the calendar year. For this reason 

the past financial year only lasted seven 

months – June 1, 2000 to December 31, 

2000. A direct comparison with the figures 

of previous years is therefore impossible. 

■ stock option rights 

The right to participate in the future appreciation 

of an equity’s value. At Pfleiderer AG 

members of management at the end of 2000 

had the option to participate in the company’s 

success through the acquisition of such 

rights. 

■ stock options 

Form of remuneration entailing the issue of 

subscription rights to members of management 

and employees, conferring on them the 

right to acquire shares in the own company 

provided they achieve certain goals under 

certain conditions. 

■ wacc 

Weighted average cost of capital payable by 

the company for borrowed capital and equity 

capital on the financial markets.


index 

■ a 

Accruals 20, 56, 84, 93f, 135 

Annual Shareholder Meeting 7f, 11f, 58ff, 

98, 134, 153 

Auditors opinion 122, 145 

■ b 

Balance sheet 20f, 68f, 88ff, 114, 

120f, 126 

Biomass power generators 30, 44f, 62, 64 

Blockboard 26 

Business Campus 48, 63, 15 

■ c 

Capacity 27, 38, 32, 34 

Capital expenditure 42f, 45, 52, 64, 71, 10 

Cash flow 57, 60, 71, 110, 3 

Cash flow statement 71, 110 

Chipboard, -recycling 15f, 25ff, 30, 40, 

44ff, 37, 45ff 

Concrete masts 32f, 36f, 42, 19ff 

Consolidated companies 124, 77f 

Corporate development 4, 66, 36ff 

Corporate Governance 6, 10ff 

Cost management 28, 3f 

Coupled heat power 30, 45, 64, 44ff 

Cultural and social engagement 51 

Currency translation 53, 74, 79, 101, 

115, 130 

Current assets 21, 126, 133 

■ d 

Dates 153 

DBS Direct coating 26ff, 29 

Delivery times 37, 63 

Depreciations 18, 23, 64, 70ff, 82, 89ff, 116 

Deregulation 32 

Discontinued operations 17, 63, 76ff, 95, 

116, 120 

Divestments 3, 6, 21, 4, 30 

Dividend 60, 66, 98, 134 

Doors and Windows 17, 39ff, 43, 95 

Duropal 26, 46, 77f 

■ e 

Earnings position, -power 17ff, 24, 27f, 30, 

53, 62, 65 

Ecological profit 44 

Employees 47ff, 25, 31, 37, 39, 55, 58, 

63, 138, 14ff, 40ff 

Energy supply 16, 31f, 44ff 

Environmental protection 44ff 

Environmental report 43ff 

EU Renewable Energy Directive 

45ff 

16, 30, 35, 

EVA Economic Value Added 11, 24ff 

Export 4, 16, 19, 22, 26ff, 65, 11 

■ f 

Financial Calendar 153 

Financial position 20, 24 

Financial statements 67ff, 127ff, 145 

Financing 21, 24 

Furniture industry 16, 27f, 53, 58, 9ff, 18ff 

■ g 

GF masts 33f, 65 

Gross domestic production 14, 61 

Guidance model 48ff 

■ i 

Income Statement 70, 127, 109ff, 137ff 

Industry development 15f, 27, 34, 52f, 62 

Infrastructure Technology 16ff, 31ff, 40, 

Innotec 

42, 46f, 52ff, 58, 62ff, 6, 7, 18ff, 36ff 

26, 37 

Insulation Technology 3, 17, 37f, 41f, 47, 52 

Intangible assets 68, 81ff, 90, 97, 128 

Interest result 18, 96, 109, 137 

Internationalization 5, 9ff, 31, 40f 

Interwood 30, 62, 44ff 

Investments 91, 132, 24f 

Investor Relations 58ff, 153, 31 

■ j 

Jugend forscht 51, 15 

Junior Consultant 49, 5, 15ff 

■ k 

Key ratios 21, 150ff, 25ff 

KontraG 57, 26 

■ l 

Leadership 6ff, 10ff, 48ff, 5, 14ff 

Liabilities 20ff, 92ff, 136 

Liability 53, 110, 136 

Licenses 34, 90, 118, 128 

Liquidity 37, 55, 88 

Logistic 5, 27, 53, 62f, 13 

Long-lived assets 82, 89, 118, 126, 128, 132 

■ m 

Management Board 3ff, 10ff, 143 

Management Report 14ff 

Market leadership 65, 3 

Market Report 14, 52, 61 

Masts 31ff, 65, 19ff, 36ff, 43 

Material costs 19, 12, 37 

MDF 15, 26, 40, 42 

Mobile network 32, 34, 52f, 23, 38 

MULTIBRID ® 35, 41, 63f, 48 

Multi-year summary 150 

■ n 

Newmark International 16, 32, 43 

■ o 

Offshore-/Onshore-Anlagen 35, 41, 53, 

64, 38, 47f 

Organization 43, 46ff, 62ff 

OSB 15, 26, 12 

Outlook 61ff

■ p 

Particleboard 15f, 25ff, 9ff 

Personnel 46ff, 63, 4, 14ff, 41ff 

Personnel costs 19, 127, 138 

Personnel development 4, 14ff, 41ff 

Price 18, 28, 33, 35, 38 

Procurement 30, 37, 54, 62, 115 

Production, Productivity 26f, 31ff, 45, 

54, 12f 

Prognosis 61ff 

■ q 

Quality controll, -management, 

-assurance 27, 33, 35f, 57 

■ r 

Rail traffic 16, 32ff 

Rail traffic network 32ff 

Regenerative Energy 16, 44ff 

Registered share 11, 60 

Report of Supervisory Board 6ff 

Research and development 40ff, 54, 

64, 84, 4 

Restructuring 15, 39, 47, 94, 9 

Rheda 2000 4, 40 

Risk management 12, 57, 25ff 

ROCE 21, 25, 28, 36 

■ s 

Sales development 34 

Sales, Revenues 18, 70, 112ff, 117 

SDAX 4, 59f 

Segment report 25ff, 72, 112 

Share 59, 85, 98, 99, 100, 101, 

113, 134, 28ff 

Share price development 5, 59 

Shareholders’ Equity 17, 21, 24, 74f, 

98ff, 133f, 30 

Sleeper production 37 

Sleepers 4, 37, 44, 33ff, 32ff, 36ff 

Solid track 33, 59, 37, 39 

Steel masts 33f, 65, 38 

Stock-Option-Programm 48, 83, 99ff, 115 

in brief index pfleiderer ag 149 

Subsidiaries 43 

Supervisory Board 6ff, 10ff, 113, 140ff 

Supply chain 9 

■ t 

Taxes 85, 104ff, 116, 135, 139 

Telecommunication 34ff, 46, 59 

Thermic usage 30, 62 

Thermohydrolysis 40 

Trade 27, 30, 63, 9ff 

Traffic 33ff, 40, 32ff 

Training 47ff, 48ff, 23, 14ff 

■ u 

UMTS 32, 34 

Used wood 30, 62, 45 

US GAAP 8, 17ff, 76 

■ v 

Value added, -account 4f, 12 

Variable compensation system 12, 48, 

113, 140 

■ w 

Wind, -energy, -power 17f, 31ff, 35, 

53, 38, 47ff 

Windows 17, 39, 43 

Wood-Based Panels 15f, 25ff, 40, 42, 46f, 

52ff, 58, 62ff, 58, 62ff, 6, 7, 

8ff, 18ff, 36ff 

Page numbers in the annual report 

Page numbers in the magazine


multi-year summary 2002 2001 Short 2000 1999/2000 1998/1999 1997/1998 1996/1997 

BALANCE SHEET KEY RATIOS 

Assets 

Current assets 

US GAAP US GAAP HGB HGB HGB HGB HGB 


Cash and short-term securities 58,255 55,764 34,424 36,939 16,646 21,273 3,482 

Inventories (till short 2000 net) 114,397 132,681 171,067 175,842 143,015 136,310 122,700 

Other current assets 157,245 210,658 290,050 285,366 229,006 208,558 206,157 


Long-lived assets 

Property, plant and equipment 381,546 417,576 594,632 656,819 501,460 453,953 384,414 

Intangible assets 102,435 107,515 89,929 52,072 34,016 11,761 9,491 

Financial assets 2,072 9,583 5,480 42,860 43,568 32,711 41,801 

Other long-lived assets 36,440 45,573 

Liabilities and Stockholders’ equity 

Accruals 

Accurals for pensions 61,263 59,818 55,247 58,154 56,009 51,978 47,766 

Other accruals (till short 2000 

incl. deferred taxes) 41,306 41,985 121,907 137,329 82,675 80,727 67,266 

Financial liabilities 365,488 522,244 573,082 646,294 431,645 300,230 320,238 

Other liabilities 194,798 217,483 211,944 163,441 129,893 93,209 121,584 


Stockholders’ equity and minority 

interests 201,266 275,268 223,402 244,680 267,446 337,444 210,225 

Special reserves with an equity portion – – 0 0 42 979 965 

Balance sheet total 887,435 1,324,533 1,185,582 1,249,898 967,711 864,567 768,045 

As share of balance sheet total 

Long-lived assets (asset intensity) 58.9% 43.8% 58.2% 60.1% 59.8% 57.7% 56.7% 

Current assets 41.1% 56.2% 41.8% 39.9% 40.2% 42.3% 43.3% 

Stockholders’ equity incl. minority interests 22.7% 20.8% 18.8% 19.6% 27.6% 39.0% 27.4% 

Financial debt 41.2% 39.4% 48.3% 51.7% 44.6% 34.7% 41.7% 

Ratios 

Tangible long-lived assets financed by equity 52.8% 65.9% 37.6% 37.3% 53.3% 74.3% 54.7% 

Long-lived assets financed by equity 

Long-lived assets and inventories financed 

38.5% 47.4% 32.4% 32.5% 46.2% 67.7% 48.2% 

by equity 31.6% 38.6% 25.9% 26.4% 37.0% 53.2% 37.6%

in brief multi-year summary pfleiderer ag 151 

2002 2001 Short 2000 1999/2000 1998/1999 1997/1998 1996/1997 



INCOME KEY RATIOS 

Sales 1,028,432 1,041,995 830,350 1,437,800 1,224,060 1,118,041 1,008,529 

Foreign share in % 48.4 48.1 43.7 40.8 30.2 28.0 22.1 

EBITDA 109,460 140,910 106,970 167,628 149,316 145,671 131,360 

Depreciation – 60,566 – 63,013 – 51,715 – 95,489 – 79,914 – 67,714 – 64,493 

EBIT 48,894 77,897 55,255 72,139 69,402 77,957 66,866 

Interest – 15,265 – 22,673 – 24,047 – 34,700 – 18,016 – 17,670 – 15,260 

EBT continued operations 33,629 55,224 38,268 2,989 51,386 60,287 51,607 

Taxes of income – 13,200 – 9,180 – 14,787 – 11,573 – 16,582 – 6,759 – 14,958 

Result continued operations before 

minority interests 20,429 46,044 23,481 – 8,584 34,804 53,528 36,648 

Losses of discontinued operations – 52,452 – 14,243 

Taxes of discontinued operations – 3,000 – 4,237 

Result before minority interests – 35,023 27,564 

Minority interests – 4,641 – 3,345 

Result after minority interests – 39,664 24,219 

Earnings Key Ratios 

EBITDA in percent of sales 10.6% 13.5% 12.9% 11.7% 12.2% 13.0% 13.0% 

EBIT in percent of sales 4.8% 7.5% 6.7% 5.0% 5.7% 7.0% 6.6% 

EBT continued operations in percent 

of sales 3.3% 5.3% 4.6% 0.2% 4.2% 5.4% 5.1% 

Result continued operations before 

minority interests in percent of sales 2.0% 4.4% 2.8% – 0.6% 2.8% 4.8% 3.6% 

Ratios per share 

Average number of distributed shares 42,673,784 42,685,000 42,685,000 42,685,000 42,685,000 42,685,000 35,570,634 

Earnings per share (till short 2000 

earnings per share acc. to DVFA/SG) 

Cash flow per share (till short 2000 

– 0.93 0.57 0.34 0.37 0.72 1.10 1.08 

cash flow per share acc. to DVFA/SG) 1.84 2.53 1.63 2.85 2.73 2.66 2.92


2002 2001 Short 2000 1999/2000 1998/1999 1997/1998 1996/1997 



Financial Position 

Ratio EBIT to sales 0.05 0.07 0.07 0.05 0.06 0.07 0.07 

Capital employed in million euros 2 562.7 663.7 806.9 906.6 725.3 633.8 479.7 

Operative cash flow in million euros 3 83.3 111.2 88.4 91.2 117.9 122.6 98.5 

Turnover rates 

Turnover of inventories 9.0 7.9 8.3 1 8.2 8.6 8.2 8.2 

Turnover of receivables 10.8 7.1 6.8 1 6.6 7.1 7.4 8.1 

Turnover of capital employed 1.8 1.6 1.8 1 1.6 1.7 1.8 2.1 

Profitability after taxes on income 

Return in equity 

(Basis: Earnings continued operations 

before minority interests) 10.2% 16.7% 18.0% 1 Return on total working capital 


– 3.5% 13.0% 15.9% 17.4% 

before minority interests) 7.0% 9.2% 10.7% 1 3.1% 7.7% 11.6% 9.9% 

Return on sales 


before minority interests) 2.0% 4.4% 2.8% 1 – 0.6% 2.8% 4.8% 3.6% 

Profitability before taxes on income 

ROCE 8.7% 11.7% 11.7% 1 8.0% 9.6% 12.3% 13.9% 

CFROCE 14.8% 16.8% 18.8% 1 10.1% 16.3% 37.8% 40.1% 

Number of employees at cutt-off date 

(after 2001 without trainees) 5,647 5,785 9,708 10,238 8,721 8,132 7,579 

Average number of employees 

(after 2001 without trainees) 5,691 5,780 9,883 10,115 8,658 8,179 7,579 

1 annualised 

2 Capital employeed without capital bounded in discontinued operations. 

3 Result continued operations add. depreciation and changes in accruals for pensions 

(till short 2000: annual result add. depreciation and changes in accruals for pensions and in special reserves with an equity portion).

financial calendar 

contacts 

imprint 

in brief multi-year summary/financial calendar/contacts pfleiderer ag 153 

april 3, 2003 Balance sheet press conference, Munich 

Publication of the annual report 2002 

april 4, 2003 Analysts conference, Frankfurt 

may 15, 2003 Three month report 2003 

june 17, 2003 Annual shareholder meeting, Neumarkt Opf. 

august 7, 2003 Six month report 2003 

november 10, 2003 Nine month report 2003 

Pfleiderer AG 

Ingolstädter Strasse 51 

D-92318 Neumarkt 

E-Mail: info@pfleiderer.com 

Internet: www.pfleiderer.com 

corporate communication Tel.: +49 (0) 9181/28-84 91 

Fax: +49 (0) 9181/28-606 

investor relations Tel.: +49 (0) 9181/28-80 44 

Fax: +49 (0) 9181/28-80 46 

publisher Pfleiderer AG, Neumarkt 

Responsible: Corporate Communication 

concept and Kuhn, Kammann & Kuhn AG, 

design Cologne/Munich 

photography Michael Wiegmann, Cologne 

typesetting Zerres GmbH, Leverkusen 

lithography purpur, Cologne 

print Druckerei Lonnemann, Selm 

This annual report is published in German and English. 

In case of discrepancies, the German version shall prevail.

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