Quarterly Financial Report Third Quarter 2008 Pfeiffer Vacuum Technology AG Berliner Strasse 43 35614 Asslar Tel. +49 (0) 6441 802-314 Fax +49 (0) 6441 802-365 www.pfeiffer-vacuum.net
Contents Page Pfeiffer Vacuum Overview 3 Pfeiffer Vacuum Share Performance 4 Consolidated Interim Management Report 5 Consolidated Interim Financial Statements 15 Consolidated Statements of Income 15 Consolidated Balance Sheets 16 Consolidated Statements of Shareholders Equity 17 Consolidated Statements of Cash flows 18 Notes to the Interim Financial Statements 19 Additional Information 26 Page 2
Pfeiffer Vacuum Overview Results Q3 2008 Q3 2007 Change Q1-Q3 2008 Q1-Q3 2007 Change Total sales K 46,207 45,966 0.5% 142,013 136,718 3.9% Germany K 15,046 15,091-0.3% 49,170 40,570 21.2% Other countries K 31,161 30,875 0.9% 92,843 96,148-3.4% Operating profit K 10,854 13,051-16.8% 35,631 36,559-2.5% Net income K 8,784 7,561 16.2% 26,519 25,375 4.5% Return on sales % 19.0 16.4 18.7 18.6 Operating cash flow K 7,657 11,331-32.4% 25,186 30,403-17.2% Capital expenditures K 2,886 910 217.1% 8,644 2,834 205.0% Earnings per share 1.01 0.85 18.8% 3.02 2.84 6.3% Workforce Workforce (average ) 710 682 4.1% 704 675 4.3% Germany 543 520 4.4% 534 509 4.9% Other countries 167 162 3.1% 170 166 2.4% Sales per employee K 65 67-3.0% 202 203-0.5% September 30, 2008 December 31, 2007 Change Balance sheet Total assets K 159,295 177,430-10.2% Cash and cash equivalents K 54,203 83,383-35.0% Number of shares issued 8,970,600 8,970,600 0.0% Shareholders equity K 127,549 149,367-14.6% Equity ratio % 80.1 84.2 This quarterly financial report has been prepared in accordance with International Financial Reporting Standards (IFRS). Throughout this report, all percentages are calculated based on amounts in thousands. The quarterly financial report as of September 30, 2008 is neither audited nor reviewed by an independent auditor. Page 3
Pfeiffer Vacuum Share Performance The shares of Pfeiffer Vacuum Technology AG have been traded in Frankfurt since April 15, 1998. Deutsche Börse, Prime Standard, Frankfurt International Securities Identification Number: Reuters Symbol: Number of shares issued: Trading Symbol: PFV ISIN DE0006916604 PV.DE 8,970,600 (including 412,351 treasury shares) Free-float as of September 30, 2008: 74.96% Market capitalization as of September 30, 2008: 380.4 million The Pfeiffer Vacuum share price development showed positive during the first nine months of 2008 compared to the TecDAX. On January 2, 2008, the shares opened at 56.49. In an extremely volatile stock exchange environment which was characterized by the financial crisis Pfeiffer Vacuum shares even rose slightly in their value (close price on September 30, 2008: 56.57). In contrast, the TecDAX index decreased from 971 to 686 points in the same period; a decrease by 285 points, or 29.4%. The Pfeiffer Vacuum share price performance thus reflects the Company s sound financial development in 2008 and the independence from bank debts due to the funding from own resources. Pfeiffer Vacuum shares reached their low for the period of 40.70 on January 22, 2008.The high for the period of 68.78 was recorded on May 2, 2008. In May 2008, now for the tenth time in a row, Pfeiffer Vacuum paid a dividend to its shareholders. On the shareholders meeting on May 28, 2008, a vast majority of the shareholders voted for the common proposal of Management and Supervisory Board and resolved a dividend of 3.15 per share (2007: 2.50 per share). Pfeiffer Vacuum thus is assuring its position as the highest dividend issuer in the TecDAX. Following the Shareholders Meeting, Pfeiffer Vacuum started a share buyback program. Until September 30, 2008, a number of 285,275 shares, totaling K 17,909, was repurchased at an average price of 62.78. Taking into account the shares repurchased in prior years, the portfolio of treasury shares as of September 30, 2008, includes 412,351 shares valued at historical cost of K 21,631. On August 15, 2008, Arnhold and S. Bleichroeder Advisors, LLC informed us about their holdings of 25.04%. According to the free-float definition of Deutsche Börse, holdings exceeding 25% have to be deducted from the free-float. Thus, the free-float now stands at 74.96%. The market capitalization as of September 30, 2008, too, was calculated based on the new free-float number. Page 4
Consolidated Interim Management Report Net sales totaled 142.0 million in the first nine months of 2008, exceeding the comparable prior year period s number ( 136.7 million) by 5.3 million, or 3.9%. This is, even though sales were adversely impacted by 3.7 million because of the euro/u.s. dollar exchange rate and small delivery deferrals occurred in the third quarter in connection with the refurbishment of production facilities and the initiation of the new logistics center. Opposed to that, operating profit of 35.6 million was down by 1.0 million, or 2.5%, compared to the first nine months of 2007. The main reasons for this development are negative U.S. dollar exchange rate impacts of 3.2 million and the amount of 1.3 million spent in connection with the refurbishment of the production facilities. But as a consequence mainly of the reduced tax rate, net income was up 1.1 million, totaling 26.5 million. Thus, after-tax return on sales was 18.7% (2007: 18.6%) and earnings per share totaled 3.02, following 2.84 in 2007. This represents an increase by 6.3% which is besides the increase in net income also attributable to the share buyback program started in June 2008. Overall Economic Environment and Industry Situation With 3.7%, the worldwide economic growth rate for 2008 is expected to be significantly down from the previous year s level. This slow down in growth pace can be seen in all countries and, according to the expert s forecasts, will also continue in 2009. The economic situation in the United States and in Europe is decisive for the worldwide development. Here, growth rates of 1.7% and 1.2%, respectively, were recorded. According to the latest forecasts, the German economy will grow at 1.8% in 2008, significantly down from the 2007 level of 2.5%. The competitive situation and the competitive pressure in the vacuum industry remained unchanged compared to both, the previous year and the first half year of 2008, respectively. The weakness of the U.S. dollar and the Japanese yen still make it difficult for European companies to achieve sales in these regions, despite the situation developing on a more positive note in the third quarter of 2008 compared the first half year. Even though the development was very different in the respective product or market segments, we were able to increase our business in 2008. Business Our business operations include the development, manufacture, sale and service of vacuum pumps, vacuum measurement, components and analysis equipment and instruments, as well as vacuum systems. Page 5
Consolidated Interim Management Report Sales Presented below are net sales by segment, by region, by product and by market for the periods ended September 30, 2008 and 2007. It should be noted with respect to net sales by segment that the sales shown in this presentation were allocated on the basis of the location that invoiced the sales. The segment-based presentation thus shows net sales by subsidiaries. Net sales by region, on the other hand, include all sales in a given region, regardless of which subsidiary within the Pfeiffer Vacuum Group actually invoiced the sales. Net sales by segment and by region thus differ from one another to a greater or lesser extent. Net sales in the Asian segment, for example, differ from those shown for the Asian region, as the Asian segment includes only the sales of our Asian subsidiaries in India, Korea and China. The presentation for the Asian region, on the other hand, additionally includes sales generated directly with Asian customers by the German company, for example with customers in Japan or Taiwan. Net sales in the U.S. region and the U.S. segment, on the other hand, are nearly identical, because virtually all sales in this region are handled by our U.S. subsidiary. Sales by Segment (Companies) Pfeiffer Vacuum s subsidiaries in the individual countries are independent legal entities with their own management which distribute the products and provide services. Accordingly, we identify our operating segments geographically. Due to the similarity of their economic characteristics, including nature of products sold, type of customers, method of product distribution and economic environment, we aggregate our European subsidiaries outside Germany into one reportable segment, Europe (excluding Germany). Sales by Segment Three Months ended Nine Months ended September 30, September 30, K 2008 2007 2008 2007 Net sales Germany 23,500 24,343 77,461 68,683 Europe (excluding Germany) 10,457 10,040 33,342 33,393 United States 10,926 10,640 27,521 31,682 Asia 1,324 943 3,689 2,960 Total 46,207 45,966 142,013 136,718 Already in the first six months of 2008, sales were increased in the Germany and Asia segment. This overall trend continued. In Germany, a sales increase by 8.8 million, or 12.8%, to 77.5 million was recorded. But this segment, too, shows the overall economic downturn and the related restraints in capital expenditures leading to sales of 23.5 million in the third quarter 2008, down 0.8 million from the comparable prior Page 6
Consolidated Interim Management Report Germany Sales by Segment (in %) Europe (excl. Germany) year period. In contrast, sales in Asia were up in the first nine months of 2008 as well as in the third quarter 2008 (+ 0.7 million and + 0.4 million, respectively). The U.S. segment accounted for the most significant sales decrease. Following 31.7 million in the first nine months of 2007, 27.5 million were recorded in the current year s period. This represents a decrease by 4.2 million, or 13.1%. It has to be taken into account that sales were burdened 3.7 million due to the U.S. dollar exchange rate. However it is noticeable, that sales in the third quarter 2008 increased, despite a negative exchange rate impact of 1.0 million. Expressed in U.S. dollar, sales of our U.S. subsidiary in this period were up by 13.2%. With 33.3 million in the first three quarters of 2008, the segment Europe (excluding Germany) was down only slightly from the previous year ( 33.4 million) and was even increased in the third quarter of 2008 (+ 0.4 million to 10.5 million). The positive overall development of the sales companies in Sweden, Austria, England and France was overcompensated by decreasing sales in Italy and Switzerland. 54.5 Asia 2.6 23.5 19.4 United States The Germany segment continues to be the segment with the highest share of total sales. Because of the positive development, the percentage increased from 50.2% in the first nine months of 2007 to 54.5% in 2008. The percentage of sales accounted for by the other European companies slightly decreased from 24.4% to 23.5%. The sales percentage of the U.S sales company decreased significantly and now stands at 19.4%, following 23.2% in 2007. The share of the Asian segment s sales was 2.6%, slightly above the previous year s level (2.2%). Sales by Region To provide additional information, we are also presenting sales by region in the following table. It includes all sales in a given region, regardless of which company in the Pfeiffer Vacuum Group actually generated these sales. Sales by Region Three Months ended Nine Months ended September 30, September 30, K 2008 2007 2008 2007 Net sales Germany 15,046 15,091 49,170 40,570 Europe (excluding Germany) 13,751 12,971 43,750 41,356 United States 10,820 10,567 27,261 31,459 Asia 6,170 7,038 20,208 22,118 Rest of world 420 299 1,624 1,215 Total 46,207 45,966 142,013 136,718 Relating to the year 2008 so far, the development in the Germany region has to be pointed out. In the first nine months of 2008 a sales increase by Page 7
Consolidated Interim Management Report United States 19.2 Sales by Region (in %) Asia 30.8 Europe (excl. Germany) Other 14.2 1.2 34.6 Germany 8.6 million, or 21.2%, to 49.2 million was recorded. In contrast, sales in the third quarter are flat to previous year. Accounting for 34.6% of total sales, Germany remained the strongest sales region, followed by Europe (excluding Germany) with a share of 30.8%. Here, the sales development with a growth rate of 5.8% (nine months 2008) and 6.0% (Q3 2008), respectively, is satisfying. The weakness of the U.S market and of the U.S. dollar already mentioned in the sales by segment section is also reflected in the sales by region with a sales decrease by 4.2 million, or 13.3%, to 27.3 million and a percentage of total sales of 19.2% in the first nine months of 2008 (2007: 23.0%). But the sales by the U.S. region, too, show the positive development in the third quarter 2008. The continuing strength of the euro was the main reason for the sales decrease by 1.9 million, or 8.6%, to 20.2 million in the Asian region in 2008. Sales here accounted for 14.2% of total sales after 16.2% in 2007. Sales by Product Sales by Product Three Months ended Nine Months ended September 30, September 30, K 2008 2007 2008 2007 Net sales Turbopumps 20,605 19,314 57,869 60,372 Measurement/analysis equipment 11,416 10,269 35,268 32,140 Backing pumps 7,337 8,605 21,315 21,942 Service 5,541 6,312 17,949 18,862 Systems 1,219 1,315 9,256 2,949 Other 89 151 356 453 Total 46,207 45,966 142,013 136,718 Service Systems Backing Pumps Other 12.6 15.0 Sales by Product (in %) 0.3 6.5 24.8 Turbopumps 40.8 Measurment-/ AnalysisEquipment The differing development in the product groups already seen in the first half year of 2008 continued in Q3 2008. Caused, among others, by the big order, sales in the systems business for the first three quarters of 2008 were up significantly by 6.3 million, totaling 9.3 million. Sales of measurement/analysis equipment, too, showed a positive development, increasing by 3.1 million, or 9.7%, to 35.3 million. Sales in the systems business accounted for 6.5% of total sales while sales of measurement/analysis equipment stood at 24.8%. Turbo pump sales decreased by 2.5 million, or 4.1%, totaling 57.9 million in the first nine months of 2008 (2007: 60.4 million). Predominantly the weak U.S. dollar caused this development. With 2.1 million, 57% of the overall negative U.S. dollar exchange rate impact relate to turbo pumps. Additionally, sales were burdened by the weaker demand from the semiconductor business. The decrease in 2008 is due to the development in the first half year of 2008, as sales in Q3 increased by 6.7%. With 40.8% this product group accounted for the highest percentage of total sales (2007: 44.2%). Service and backing pumps sales, too, decreased (- 0.9 million, or -4.8%, and - 0.6 million, or -2.9%, respectively). The percentages of total sales are 12.6% and 15.0% (2007: 13.8% and 16.0%). Page 8
Consolidated Interim Management Report Sales by Market Sales by Market Three Months ended Nine Months ended September 30, September 30, K 2008 2007 2008 2007 Net sales Analytical industry 13,089 11,077 37,421 35,443 Industrial 10,017 13,297 32,560 32,872 Coating 9,392 8,015 31,193 23,249 R&D 7,771 6,957 22,486 24,229 Semiconductors 3,601 4,784 11,846 15,423 Chemical and process technology 2,337 1,836 6,507 5,502 Total 46,207 45,966 142,013 136,718 Process Technology Semiconductors R&D 15.8 Sales by Market (in %) 22.0 8.3 4.6 22.9 Analytical Industry 26.4 Analysis of sales by market still shows a heterogeneous picture. Market segments coating and analytical industry were up significantly (+ 7.9 million, or 34.2%, and + 2.0 million, or 5.6%, respectively, in the first three quarters of 2008), with the coating market still being affected by the development of the solar industry. With a growth of 1.0 million, or 18.3%, chemical and process technology developed on a positive note, too. In contrast, the market segments semiconductors and R&D decreased (-23.2% and -7.2%, respectively). With respect to the relative relevance of markets, coating moved to rank 3 with a sales percentage of 22.0% (2007: 17.0%), just under the industrial share of total sales of 22.9% (after 24.1% in the previous year). With 26.4% of total sales, the analytical industry still is the most important market (2007: 25.9%). Coating Industrial Order Intake and Order Backlog On September 3, 2008, Pfeiffer Vacuum announced to have received a follow up order from the solar industry. This order was a major driver for the development of new orders in 2008. Following 154.6 million in the first nine months of 2007, order intake for 2008 totals 182.7 million. This represents an increase by 28.1 million. It has to be taken into account that order intake in 2007 was also impacted by a big order from the solar industry. Adjusted for this effect, the order intake in 2008 is also up significantly from the prior year. The main reason for this is to be seen in the development of new orders for vacuum pumps. On September 30, 2008, the book-to- bill ratio, the quotient of new orders and sales amounted to 1.29 compared to 1.13 in the year before. On September 30, 2008, orders on hand amounted to 74.5 million while 43.5 million were recorded in September 2007. This is an increase by 31.0 million, or 71.3%. Thereof, 43.2% relate to vacuum pumps (turbo pumps and backing pumps). The orders on hand give us enough visibility for the remaining months of 2008 and the first months of 2009. Page 9
Consolidated Interim Management Report Contracts are only recorded as orders when they are based upon binding contracts. The value of orders on hand should not be used to predict future sales and order volumes. Cost of Sales and Gross Profit Totaling 75.8 million in the first nine months of 2008, cost of sales increased by 6.6 million, or 9.5%, as compared to 69.2 million in the previous year s period. This increase is mainly due to the higher sales volume. Additionally, the product mix, in this specific case a higher percentage of product sales with lower margins, and increasing personnel and energy cost as well as refurbishment and reconstruction expenses led to disproportionate increase in cost of sales. Sales increasing by 3.9% and cost of sales increasing by 9.5% resulted in a gross profit decreasing by 1.9%, totaling 66.2 million after 67.5 million in the first three quarters of 2007. Gross margin (gross profit as percentage of sales) went down from 49.4% in the first nine months of 2007 to 46.6% in the current year s period. In addition to the increases in cost of sales described above, it has to be taken into account that exchange rate related burdens in sales of 3.7 million are only compensated by 0.1 million from exchange rate related decreases in cost of sales. In total, gross profit in the first three quarters of 2008 is burdened with 3.6 million due to exchange rate changes. Selling and Marketing Expenses Selling and marketing expenses amount to 16.5 million at the end of September 2008, up 0.8 million, or 5.3%, from the previous year s level of 15.7 million. The main reasons for this development were intensified selling activities in Eastern Europe and increased personnel expenses in general, as well as a new volume of our product catalogue. Relative to sales, selling and marketing expenses increased from 11.5% in the first nine months of 2007 to 11.6% in 2008. General and Administrative Expenses The decrease in general and administrative expenses from 9.9 million to 8.9 million in the first three quarters of 2008 amounted to 1.0 million, or 10.0%. This development is predominantly due to the lapse of one time effects in connection with allowances for a doubtful receivable and to the lowered administrative expenses after the withdrawal from the New York Stock Exchange. Relative to sales, the ratio for the first nine months 2008 went down from 7.2% in 2007 to 6.3%. Page 10
Consolidated Interim Management Report Research and Development Expenses Totaling 5.2 million in the first three quarters of 2008, research and development expenses slightly decreased from 5.4 million in the previous year. This is mainly due to the development expenses in connection with the new turbo pump generation HiPace in 2007. In the third quarter 2008, research and development expenses stood at 1.7 million, down 0.3 million from Q3 2007. As a result of higher sales, however, the expense ratio declined from 4.0% in 2007 to 3.7% in the first nine months of 2008. Operating Profit Following 36.6 million in 2007, an operating profit of 35.6 million was generated in the first three quarters of 2008. This represents a decrease by 1.0 million, or 2.5%, and, thus, the EBIT margin, the ratio between operating profit and sales, went down to 25.1% from the previous year s level of 26.7%. All in all, it has to be taken into account that exchange rate related impacts on sales of - 3.7 million and compensatory exchange rate related effects in operating expenses of - 0.5 million lead to a total EBIT burden of 3.2 million during the first nine months of 2008. Additionally, operating profit includes one-time expenses for refurbishment and reconstruction which are predominantly attributable to cost of sales. Financial Result After 4.9 million in the previous year s period, the financial result in the first three quarters of 2008 amounts to 3.4 million. This decrease by 1.5 million mainly results from omission of one time gains on disposals of investment securities ( 2.3 million) in 2007 and the increased foreign exchange results ( 1.2 million in 2008 compared to 0.3 million in 2007). Income Taxes Due to the 2008 Corporate Tax Reform the tax exposure of the German group companies significantly decreased in 2008. This also is the main reason for the decrease in tax rate for the first nine months of 2008 (32.0% in both, third quarter and first nine months). In 2007, the tax rate was 38.8% (nine months 2007) and 46.1% (third quarter 2007), respectively. The high tax rate in the third quarter of 2007 was mainly due to the write down of the German group companies deferred tax assets in connection with the Corporate Tax Reform. Page 11
Consolidated Interim Management Report Net Income The negative impacts due to a decreasing operating profit and financial result totaling 2.4 million were overcompensated by the decreasing income tax expenses. In total, net income for the first nine months of 2008 was 26.5 million, up by 1.1 million, or 4.5% from 25.4 million the year before. Net return on sales for the first three quarters of 2008 stood at 18.7% (2007: 18.6%), again representing a top level. Earnings per share in 2008 totaled 3.02, increasing significantly from the previous year s level of 2.84. This disproportionate growth compared to the relative increase in net income as also attributable to the share buyback program started in June 2008. Financial Position Compared to December 31, 2007, the balance sheet total as of September 30, 2008, significantly decreased from 177.4 million by 18.1 million, or 10.2%, to 159.3 million. This was mainly due to the development of cash and cash equivalents in connection with the dividend payment of 27.9 million at the end of May 2008 and the treasury shares repurchased since June ( 17.9 million until September 30, 2008). In contrast, fixed assets and inventories increased significantly. The increase by 6.9 million to 33.1 million in fixed assets is mainly due to the construction of the logistics center which was finalized in September 2008. The high amount of orders on hand is the main reason for the inventories increasing by 7.0 million to 23.8 million. Despite the described decrease in cash and cash equivalents, with a percentage of 34.0% of total assets this line item still is the most important asset within the Pfeiffer Vacuum Group (December 31, 2007: 47.0% of total assets). The cash flow statement shows the development of liquid assets in detail. The main reasons for total shareholders equity decreasing by 21.8 million to 127.5 million are the dividend payment of 27.9 million in May 2008 and the repurchase of treasury share since June 2008, which reduced shareholders equity by 17.9 million. This development was partly offset by the net income of 26.5 million for the nine months period 2008. With 80.1% as of September 30, 2008, the equity ratio is still far above average. Further material changes on the liabilities side refer to the increase by 1.6 million to 7.4 million in income tax provisions. Cash Flow Further on, we are able to generate required cash from operating activities to fund our day-to-day business and investment projects. Cash flow from operating activities for the period from January 1, 2008 through September 30, 2008, totaled 25.2 million. Following 30.4 Page 12
Consolidated Interim Management Report million in 2007, this represents a decrease by 5.2 million which was with 3.9 million predominantly attributable to the increase in inventories. Additionally, the development of provisions, especially for income taxes, burdened the operating cash flow with 3.4 million. Mainly due to the cash received because of the sale or redemption of investment securities in the amount of 7.5 million, Pfeiffer Vacuum recorded a cash inflow from investing activities in the amount of 4.9 million in the prior year period. In contrast, cash used in investing activities in 2008 totaling 8.9 million is predominantly impacted by the capital expenditures ( 8.6 million; 2007: 2.8 million) and by the payment for the purchase of shares from minority shareholders ( 0.4 million). At the Annual Shareholders Meeting on May 28, 2008, a dividend for the year 2007 amounting to 3.15 per share was resolved. The amount paid to the shareholders totaled 27.9 million. Additionally, shareholders indirectly received further 17.9 million as a consequence of the 2008 share buyback program. Thus, cash used in financing activities totaled 45.8 million in 2008. In the first nine months of 2007, cash used in financing activities was only caused by the dividend payment to the Pfeiffer Vacuum Technology AG shareholders totaling 22.1 million. Workforce Workforce As of September 30, 2008, the Company employed a workforce of 710 people, 543 of them in Germany and 167 in other countries. Germany Other Countries Total June 30, 2008 2007 2008 2007 2008 2007 Manufacturing and Service 288 280 49 47 337 327 Research and Development 71 77 - - 71 77 Sales and Marketing 127 111 97 94 224 205 Administration 57 52 21 21 78 73 Total 543 520 167 162 710 682 The number of employees increased by 4.1%. Risk and Opportunities Report During the first nine months of the 2008 fiscal year, there were no changes in the risks and opportunities as described in our Annual Report for the year ended December 31, 2007. The Annual Report is available on our homepage at www.pfeiffer-vacuum.net. Page 13
Consolidated Interim Management Report Generally, Pfeiffer Vacuum is not directly impacted by the financial crisis as the free liquidity has always been invested very conservatively. During the first nine months of 2008, Pfeiffer Vacuum also did not incur any indirect losses, for example through bad debts or order cancelations by our customers. However, we are analyzing the financial crisis and we can not exclude customers or suppliers being impacted and, thus, any impacts on our earnings. Major Events after the close of the third quarter 2008 Within the scope of the 2008 share buyback program, further 44,001 shares were repurchased at an average price of 50.32 between October 1, 2008 and October 24, 2008. Thus, an amount of 2.2 million was spent for these purchases. Total treasury shares now add up to 456,352 shares, representing 5.1% of total shares. For the time being, the share buyback program was suspended. Outlook After a good worldwide economic development in 2007 we now see a slow down of economic growth for 2008. Besides a slow down in the US economy, the development of the European economies, too, is decreasing. In addition, the strong euro continues to burden export-oriented companies from the euro zone, despite the U.S. dollar gaining strength recently. In our opinion, the 2008 economic trend will continue in 2009. Pfeiffer Vacuum currently has very well filled order books, not only because of the already mentioned big order from the solar industry. The order intake s vitality is lasting. Because the big order from the solar industry contrary to our former expectations will be recognized as sales mostly in 2009 and because we are struggling with supply shortfalls and shortfalls in our own production it is questionable whether or not we will fully achieve our former sales forecast of between 202 and 207 million. Maybe total sales for 2008 will lag slightly behind that. In every case we will start the year 2009 with an extremely good number of orders on hand. This is a situation we did not have in the past. Based on this, we are confident to elude from a potential general economic downturn and to increase our sales beyond 2008 also in 2009. As the current financial figures of Pfeiffer Vacuum show, we were successful to keep the EBIT margin within the predicted range of between 25 and 27%, despite the EBIT being burdened with 3.2 million due to exchange rate changes. The impact from the 2008 Corporate Tax Reform on the important German group companies has already been reflected in the first nine months of 2008 in a very low tax rate of 32.0%. Based on present knowledge, no significant changes are expected to occur in 2008 in this context so that a high net return on sales can be assumed. Additionally, positive effects on the earnings per share will arise from the 2008 share buyback program. Page 14
Consolidated Interim Financial Statements Consolidated Statements of Income (unaudited) Three Months ended September 30, Nine Months ended September 30, K 2008 2007 2008 2007 Net sales 46,207 45,966 142,013 136,718 Cost of sales -24,987-22,776-75,798-69,212 Gross profit 21,220 23,190 66,215 67,506 Selling and marketing expenses -5,598-5,207-16,527-15,690 General and administrative expenses -3,048-2,955-8,876-9,860 Research and development expenses -1,720-1,977-5,181-5,397 Operating profit 10,854 13,051 35,631 36,559 Financial expenses -5-1 -25-14 Financial income 423 877 2,199 4,593 Foreign exchange gains/losses 1,646 107 1,194 310 Earnings before taxes 12,918 14,034 38,999 41,448 Income taxes -4,134-6,473-12,480-16,073 Net income 8,784 7,561 26,519 25,375 Thereof attributable to: Pfeiffer Vacuum Technology AG shareholders 8,734 7,480 26,430 25,121 Minority interests 50 81 89 254 Earnings per share (in ): Basic 1.01 0.85 3.02 2.84 Diluted 1.01 0.85 3.02 2.84 See accompanying notes to the interim financial statements. Page 15
Interim Financial Statements Consolidated Balance Sheets (unaudited) K September 30, 2008 December 31, 2007 ASSETS Intangible assets 402 221 Property, plant and equipment 33,142 26,251 Investment properties 833 1,767 Investment securities 9,319 11,060 Prepaid pension cost 142 142 Deferred tax assets 4,350 4,185 Other non-current assets 1,939 1,901 Total non-current assets 50,127 45,527 Inventories 23,807 16,857 Trade accounts receivable 25,183 26,255 Receivables from construction contracts 422 2,631 Other accounts receivable 3,578 1,979 Prepaid expenses 1,930 608 Other current assets 45 190 Cash and cash equivalents 54,203 83,383 Total current assets 109,168 131,903 Total assets 159,295 177,430 SHAREHOLDERS EQUITY AND LIABILITIES Equity Share capital 22,965 22,965 Additional paid-in capital 13,305 13,305 Retained earnings 117,758 119,185 Other equity components -5,419-3,113 Treasury shares -21,631-3,722 Equity of Pfeiffer Vacuum Technology AG shareholders 126,978 148,620 Minority interests 571 747 Total equity 127,549 149,367 Deferred tax liabilities 265 275 Provisions for pensions 2,222 1,599 Total non-current liabilities 2,487 1,874 Trade accounts payable 5,191 4,803 Other accounts payable 2,080 1,539 Provisions 12,156 12,455 Income tax liabilities 7,381 5,810 Customer deposits 2,451 1,582 Total current liabilities 29,259 26,189 Total shareholders equity and liabilities 159,295 177,430 See accompanying notes to the interim financial statements. Page 16
Interim Financial Statements Consolidated Statements of Shareholders' Equity (unaudited) K Share Capital Equity of Pfeiffer Vacuum Technology AG Shareholders Additional Paid-in Retained Other Equity Treasury Capital Earnings Components Shares Total Minority Interests Total Equity Balance on January 1, 2007 22,965 13,305 104,269 1,520-3,722 138,337 635 138,972 Currency changes - - - -1,197 - -1,197-32 -1,229 Net results from cash flow hedges - - - -155 - -155 - -155 Revaluation of available-for-sale securities - - - -1,597 - -1,597 - -1,597 Earnings recorded directly in equity - - - -2,949 - -2,949-32 -2,981 Net income - - 25,121 - - 25,121 254 25,375 Total earnings or the period - - 25,121-2,949-22,172 222 22,394 Dividend payment - - -22,109 - - -22,109 - -22,109 Balance on September 30, 2007 22,965 13,305 107,281-1,429-3,722 138,400 857 139,257 Balance on January 1, 2008 22,965 13,305 119,185-3,113-3,722 148,620 747 149,367 Currency changes - - - -55 - -55-117 -172 Net results from cash flow hedges - - - -536 - -536 - -536 Revaluation of available-for-sale securities - - - -1,715 - -1,715 - -1,715 Earnings recorded directly in equity - - - -2,306 - -2,306-117 -2,423 Net income - - 26,430 - - 26,430 89 26,519 Total earnings for the period - - 26,430-2,306-24,124-28 24,096 Dividend payment - - -27,857 - - -27,857 - -27,857 Share buyback - - - - -17,909-17,909-17,909 Purchase of minority interests - - - - - - -148-148 Balance on September 30, 2008 22,965 13,305 117,758-5,419-21,631 126,978 571 127,549 See accompanying notes to the interim financial statements. Page 17
Interim Financial Statements Consolidated Statements of Cash Flows (unaudited) Nine Months ended September 30, K 2008 2007 Cash flow from operating activities: Net income 26,519 25,375 Depreciation and amortization 2,605 2,347 Gain on disposal of assets -60-2,234 Other non-cash income and expenses 403 1,593 Effects of changes in assets and liabilities: Inventories -7,258-3,349 Receivables and other assets -87-1,273 Provisions, including pension and income tax liabilities 1,912 5,293 Payables, other liabilities 1,152 2,651 Net cash provided by operating activities 25,186 30,403 Cash flow from investing activities: Proceeds from disposals of fixed assets 143 151 Capital expenditures -8,644-2,834 Purchase of minority interests -356 - Proceeds from disposals of investment securities - 7,543 Net cash provided by/used in investing activities -8,857 4,860 Cash flow from financing activities: Dividend payment -27,857-22,109 Purchase of treasury stock -17,909 - Net cash used in financing activities -45,766-22,109 Effects of foreign exchange rate changes on cash and cash equivalents 257-679 Net increase/decrease in cash and cash equivalents -29,180 12,475 Cash and cash equivalents at beginning of period 83,383 75,354 Cash and cash equivalents at end of period 54,203 87,829 See accompanying notes to the interim financial statements. Page 18
Notes to the Interim Financial Statements (unaudited) 1. The Company and Basis of Presentation The parent company within the Pfeiffer Vacuum Group ( the Company or Pfeiffer Vacuum ) is Pfeiffer Vacuum Technology AG, domiciled at Berliner Strasse 43, 35614 Asslar, Germany. Pfeiffer Vacuum Technology AG is a stock corporation organized under German law and recorded in the Register of Companies at the Local Court of Wetzlar under Number HRB 44. The Company is listed on the Deutsche Börse Stock Exchange in Frankfurt am Main, Germany, where it is included in the TecDAX index. Pfeiffer Vacuum is one of the leading full-line vacuum technology manufacturers, offering custom solutions for a wide range of needs in connection with the generation, control and measurement of vacuum. The products developed and manufactured at the Company s production facility in Asslar, Germany, include turbopumps, a range of backing pumps, such as rotary vane, Roots and dry pumps, complete pumping stations, as well as custom vacuum systems and components. Pfeiffer Vacuum markets and distributes its products through its own network of sales companies and independent marketing agents. Moreover, there are service support centers in all major industrial locations throughout the world. The Company s primary markets are located in Europe, the United States and Asia. The Consolidated Financial Statements of Pfeiffer Vacuum Technology AG have been prepared in accordance with International Financial Reporting Standards (IFRS) and the interpretations of the International Financial Reporting Interpretations Committee (IFRIC) as applicable in the European Union (EU). This includes the International Accounting Standards (IAS), which continue to retain their validity, and the interpretations of the Standing Interpretations Committee (SIC). Pfeiffer Vacuum prepares its Consolidated Interim Report ( Interim Report ) in euros ( ). Unless otherwise indicated, the presentation is in thousands of euros (K ). 2. Accounting and Valuation Methods In preparing this interim report as of September 30, 2008, IAS 34 Interim Financial Reporting was applied. In doing so, the same accounting and valuation methods as in the Consolidated Financial Statements for the fiscal year ended December 31, 2007 were used. Please refer to the detailed description of these methods in the Notes to the Consolidated Financial Statements 2007, which are available in the internet at www.pfeiffer-vacuum.net. Page 19
Notes to the Interim Financial Statements (unaudited) In 2008 there were no changes in the consolidated companies. In the second quarter of 2008, shares were purchased from minority shareholders. The purchase price was K 356 and a goodwill amounting to K 213 resulted. The goodwill is shown as an intangible asset. Still there are no investments in jointly controlled entities or investments in associated companies or investments in companies controlled pursuant to the rules of SIC 12 Special Purpose Entities. 3. Property, Plant and Equipment Property, plant and equipment comprise the following: Property, Plant and Equipment September 30, December 31, K 2008 2007 Land and buildings 20,707 14,840 Technical equipment and machinery 6,509 5,366 Other equipment, factory and office equipment 4,501 3,254 Construction in progress 1,425 2,791 Total property, plant and equipment 33,142 26,251 The significant increase of fixed assets is mainly due to the construction of the logistics center which was put into operation in September 2008. Following the own use from June 2008 of some premises that were previously rented, investment properties amounting to K 892 had to be reclassified as land and buildings. 4. Investment Securities The Company holds fixed-income securities in the total amount of 5.0 million which are classified as held-to-maturity and therefore carried at amortized cost. The portfolio of equity securities is categorized as available-for-sale with changes in fair value being recorded directly in equity. In 2008, the fair value decreased by 1.7 million to 4.3 million. Page 20
Notes to the Interim Financial Statements (unaudited) 5. Inventories Inventories consist of the following: Inventories September 30, December 31, K 2008 2007 Raw materials 9,352 7,910 Work-in-process 6,550 4,537 Finished products 11,041 7,440 Reserves -3,136-3,030 Total inventories 23,807 16,857 The Company s positive order situation connected with a high plant utilization led to increased inventories. 6. Paid Dividends At the Annual Shareholders Meeting on May 28, 2008, the shareholders resolved a dividend of 3.15 per share for the year 2007. Thus, a total of 27,857,100.60 was paid to the shareholders. 7. Treasury Shares At the Annual Shareholders Meeting on May 28, 2008, the shareholders authorized Pfeiffer Vacuum to acquire treasury shares of the Company pursuant to 71, Sub-para. 1, No. 8, German Stock Corporation Act. The Company is authorized to acquire treasury shares representing up to 2,296,473.60 of the capital stock (897,060 shares equal to 10% of capital stock at time of resolution) through November 27, 2009. According to the Management Board s announcement, a share buyback program was started after the Annual Shareholders Meeting. Between June 2, 2008 and September 30, 2008, a total of 285,275 shares was repurchased at an average price of 62.78. This represents a portion of 3.2% of share capital and a total purchase price of K 17.909. Taking into account the shares repurchased in prior years, the portfolio of treasury shares as of September 30, 2008, includes 412,351 shares valued at historical cost of 21.6 million. As of September 30, 2008, treasury shares represent 4.6% of total shares. Page 21
Notes to the Interim Financial Statements (unaudited) 8. Other Equity Components The other equity components which do not impact the income statement, developed as follows: Other Equity Components K Unrealized Gains/Losses on Hedges Foreign Currency Translation Adjustments Revaluation of Available-for- Sale Securities Balance on January 1, 2007 259-2,224 3,485 1,520 Changes in fair value of cash flow hedges (net of tax) -155 - - -155 Changes in foreign currency translation - -1,197 - -1,197 Revaluation of securities classified as available-for-sale (net of tax) - - -1,597-1,597 Balance on September 30, 2007 104-3,421 1,888-1,429 Total Balance on January 1, 2008 28-4,476 1,335-3,113 Changes in fair value of cash flow hedges (net of tax) -536 - - -536 Changes in foreign currency translation - -55 - -55 Revaluation of securities classified as available-for-sale (net of tax) - - -1,715-1,715 Balance on September 30, 2008-508 -4,531-380 -5,419 Pension Expense for All Plans 9. Pension Benefits and Similar Obligations Pension expense for all plans included the following components: Three Months ended Nine Months ended September 30, September 30, K 2008 2007 2008 2007 Service cost 187 210 559 633 Interest cost 624 573 1,870 1,722 Expected return on assets -540-518 -1,620-1,559 Net pension cost 271 265 809 796 Page 22
Warranty Provisions Notes to the Interim Financial Statements (unaudited) 10. Warranty Warranty provisions developed as follows: Nine Months ended September 30, K 2008 2007 Balance on January 1 1,983 1,929 Currency changes 7-30 Additions 454 283 Utilization -132-73 Releases - -67 Balance on June 30 2,312 2,042 Earnings * per Share 11. Earnings per Share The following table sets forth the computation of basic and diluted earnings per share: Three Months ended Nine Months ended September 30, September 30, 2008 2007 2008 2007 Net income (in thousands ) 8,734 7,480 26,430 25,121 Weighted-average number of shares 8,622,532 8,843,524 8,763,228 8,843,524 Number of conversion rights - - - - Adjusted weighted average number of shares 8,622,532 8,843,524 8,763,228 8,843,524 Earnings per share in (basic and diluted): 1.01 0.85 3.02 2.84 * Attributable to Pfeiffer Vacuum Technology AG shareholders Page 23
Notes to the Interim Financial Statements (unaudited) 12. Segment Reporting Segment Reporting as of September 30, 2008 K Germany Europe (excluding Germany) US Rest of World Others/ Eliminations Total Net sales 124,546 33,431 27,587 4,422-47,973 142,013 Third party 77,461 33,342 27,521 3,689-142,013 Intercompany 47,085 89 66 733-47,973 - Operating profit 31,006 3,039 1,032 499 55 35,631 Financial income - - - - 3,368 3,368 Income before income taxes 31,006 3,039 1,032 499 3,423 38,999 Segment assets 104,892 19,050 31,067 4,286-159,295 Thereof: Assets according to IFRS 8.33 (b)* 34,473 661 99 1,083-36,316 Segment liabilities 23,285 5,916 2,016 529-31,746 Capital expenditures: Property, plant and equipment ** 8,273 207-71 - 8,551 Intangible assets 90 3 - - - 93 Depreciation* 2,197 189 36 58-2,480 Amortization 117 8 - - - 125 * Non-current assets other than financial instruments deferred tax assets and prepaid pension cost. ** Including investment properties Segment Reporting as of September 30, 2007 K Germany Europe (excluding Germany) US Rest of World Others/ Eliminations Total Net sales 114,773 33,479 31,721 4,301-47,556 136,718 Third party 68,683 33,393 31,682 2,960-136,718 Intercompany 46,090 86 39 1,341-47,556 - Operating profit 30,515 2,489 2,626 1,198-269 36,559 Financial income - - - - 4,889 4,889 Income before income taxes 30,515 2,489 2,626 1,198 4,620 41,448 Segment assets 139,046 19,460 13,993 4,197-176,696 Thereof: Assets according to IFRS 8.33 (b)* 25,539 627 154 935-27,255 Segment liabilities 29,192 5,724 1,637 886-37,439 Capital expenditures: Property, plant and equipment ** 2,440 175 23 104-2,742 Intangible assets 86 6 - - - 92 Depreciation* 1,915 177 44 38-2,174 Amortization 164 9 - - - 173 * Non-current assets other than financial instruments deferred tax assets and prepaid pension cost. ** Including investment properties Page 24
Notes to the Interim Financial Statements (unaudited) 13. Income Tax Expense Under German corporate tax law, taxes on income are composed of corporate taxes, trade taxes and an additional surtax. The Company s effective tax rate was 32.0% for the first nine months of 2008 and 38.8% for the first nine months of 2007. The effective tax rate for the third quarter 2008 was 32.0% (2007: 46.1%). 14. Independent Auditor At the Annual Shareholders Meeting on May 28, 2008, the Supervisory Board proposed and the Shareholders elected Ernst & Young AG, Wirtschaftsprüfungsgesellschaft/Steuerberatungsgesellschaft, Eschborn, Germany, as the independent auditor of both the accounts of the Company and the consolidated accounts for the 2008 fiscal year. 15. Major Related Party Transactions Besides the transactions with the subsidiaries that are eliminated during the consolidation process and the regular compensation of Management Board members, no material transactions with related parties occurred in the first nine months of 2008. Asslar, November 3, 2008 Pfeiffer Vacuum Technology AG Management Board Page 25
Additional Information Financial Calendar 2008 2008 Annual Results Wednesday, March 25, 2009 1 st Quarter 2009 Results Tuesday, May 5, 2009 Annual Shareholders Meeting Tuesday, May 26, 2009 2 nd Quarter 2009 (6-Months) Results Tuesday, July 28, 2009 3 rd Quarter 2009 (9-Months) Results Tuesday, November 3, 2009 Contacts Investor Relations Gudrun Geissler Berliner Strasse 43 35614 Asslar Germany Phone: +49 (0) 6441 802-314 Fax: +49 (0) 6441 802-365 mailto:gudrun.geissler@pfeiffer-vacuum.de www.pfeiffer-vacuum.net Public Relations Sabine Trylat Berliner Strasse 43 35614 Asslar Germany Phone: +49 (0) 6441 802-169 Fax: +49 (0) 6441 802-883 mailto:sabine.trylat@pfeiffer-vacuum.de www.pfeiffer-vacuum.net Page 26