Forbo Annual Report 2010

connect.
Forbo Holding Ltd
Lindenstrasse 8
CH-6340 Baar
Forbo International SA
Lindenstrasse 8
CH-6340 Baar
Phone + 41 58 787 25 25
Fax + 41 58 787 20 25
info@forbo.com
www.forbo.com

connect.
Annual Report 2010

Enthusiasm.
Spirit of discovery.
Mobility.
Forbo –
in everyday life

ENTHU­
SIASM

Publisher: Forbo Holding Ltd, Baar/Concept and design: Hotz & Hotz Corporate Identity, Steinhausen/
Photos: Luxwerk, Zurich/Shutterstock page 38/Layout, lithography and printing: Neidhart + Schön AG, Zurich
Our Annual Report appears in German language and in English translation and can be downloaded fromour website www.forbo.com. The printed German version is authoritative.
All statements in this report that do not refer to historical facts are forward-looking statements which areno guarantee of future performance. They are based on assumptions and involve risks and uncertainties aswell as other factors beyond the control of the company.

SC2011030204 –1

Our attractive, high-quality and versatilefloor coverings leave a lot of room for ­creativity. And we too enjoy researching, ­experi­menting and exploring new
approaches.

2

SPIRIT OFDISCOVERY

creating better environments

3

The specialists in our laboratories are­constantly developing innovative adhesive
solutions. Our market-driven thinking­guarantees excellent quality in every­application.

4

MOBILITY

5

Flexibility meets continuity. That’s whatmakes our company so versatile, reliable
and efficient, like each of our products indrive and conveyor technology.

Dr. Albert Gnägi

This E. Schneider

Chairman of the Board of Directors

Delegate of the Board of Directors and CEO“2010 was a very successful year for
Forbo. We mastered the economic crisis
well and we were always proactive in a­challenging environment, launching inno­
vative ­products and opening up new­markets.”

Forbo Annual Report 2010 – Letter to shareholders

7

To ourshareholders
Dear ladies and gentlemen,
Forbo can look back on a very successful year. Demand in our most important markets recovered strongly inthe year under review. Customer segments that are crucial for us – machine tools and plant engineering as wellas consumer durables such as cars, furniture, and textiles – are back on the growth path. Various factors suchas the expansion of our sales and distribution organization, the structural adjustments made in the past two
years, new and innovative products, plus a strong customer focus are yielding results. Putting decision-making
on a long-term footing despite the economic crisis produced a further major improvement in earnings as well
as a significant increase in sales in 2010.

Firmly on the growth path
Strong Swiss franc impacts negatively on consolidated sales growth
In the year under review, Forbo generated net sales of CHF 1,789.7 million, an increase of 6.0% versus 2009 inlocal currencies. The strong Swiss franc reduced this by 5.6%, so that top line growth in the corporate currency
came to 0.4% (previous year: CHF 1,782.4 million). Forbo generates about 80 percent of its sales in the euro
and dollar zones. As a result of the strong Swiss franc, local sales were reduced by about CHF 100 million after
translation into the corporate currency.
Bonding Systems and Movement Systems reported a big rise in sales in local currencies, growing by 9.5%
(CHF 584.7 million) and 10.8% (CHF 331.1 million). Flooring Systems has not yet met expectations as regards
sales growth and posted a moderate increase of 2.2% (CHF 873.9 million). Measures have been taken in thisdivision to exploit the synergies from the expanded and comprehensive product portfolio generated by theacquisition of Bonar Floors and to boost sales by reinforcing marketing and distribution activities. A recoveryof the construction industry in our important markets in Europe will give the division fresh impetus.

Another strong increase in profitability
All three divisions raise profitability significantly
All three divisions reported a significant improvement in operating profit before depreciation and amortization(EBITDA), which rose by 29.5% to CHF 244.3 million (previous year: CHF 188.6 million). The Group’s operating
profit (EBIT) increased substantially by 52.6% from CHF 121.8 million the previous year to CHF 185.9 million in2010.
A number of factors spearheaded the long-term growth in profitability: the structural adjustments carried out
in 2008 and 2009 to counter the economic downturn, the successful measures to increase efficiency, and new
and impressive products with greater added value.
All divisions substantially improve margins
All three divisions reported substantially higher operating profit margins than the previous year. The EBITDA
margin rose from 10.6% to 13.7% year-on-year, while the EBIT margin increased from 6.8% to 10.4%.

8

Forbo Annual Report 2010 – Letter to shareholders

Steep rise in return on invested capital
The steep rise in operating profit along with further measures to optimize invested capital again resulted in a
big improvement in profitability. The return on invested capital from operations rose from 8.6% to 12.5%.

Record-high result for Forbo
Significant rise in net income from operations
Forbo increased net income from operations by 72.3% from CHF 76.1 million the previous year to CHF 131.1
million, thus beating its record result in 2007 by a wide margin. In addition, Forbo generated an extraordinary
financial gain of CHF 43.0 million before tax (CHF 32.2 million after tax) from the sale of Rieter shares. As aresult, Group profit more than doubled to CHF 163.3 million (previous year: CHF 76.1 million).

Substantial reduction in net debt
Debt largely reduced
Shareholders’ equity came to CHF 729.7 million at the end of December 2010 (previous year: CHF 679.6 million),
which is equivalent to a healthy equity ratio of 48.8% (previous year: 38.9%). As per December 31, 2010, Forbo
had cash, cash equivalents and securities amounting to CHF 218.8 million plus 373,990 treasury shares worth
CHF 220.7 million at year-end. Net debt fell significantly to CHF 43.6 million (previous year: CHF 255.1 million).

Proposals to the Ordinary General Meeting
Dividend to be doubled
The Group’s dividend policy is governed by its development in profits. In view of the increase in profit, theBoard of Directors will propose to the Ordinary General Meeting that the dividend for the 2010 business year
be doubled from CHF 6.00 per share in 2009 to CHF 12.00 per share.
For the first time, shareholders will be able to receive the dividend in the form of a new, tax-free distribution out
of capital contribution reserves.
Capital reduction
The Board of Directors will propose to the Ordinary General Meeting that the 213,152 treasury shares (7.856%)
that Forbo has repurchased on the SIX Swiss Exchange via the second trading line be destroyed. This accords
with the original proposal from 2008, in which the Board of Directors was authorized to return to shareholders,through a share buyback program, liquidity not needed for the Group’s operations.
New share buyback program of up to 10 percent planned
The Board of Directors intends over the next three years to repurchase further shares up to 10 percent of thetotal share capital on the SIX Swiss Exchange via a second trading line in order to reduce capital. It will request
the necessary authorization from the Ordinary General Meeting.

9

Since Forbo has little net debt and generates a solid free cash ﬂow each year, this action will not limit options
for external growth and will enable the Group to further increase its proﬁtability.
Elections to the Board of Directors
The Board of Directors will propose to the Ordinary General Meeting the re-election of Messrs. This E. Schneider(Delegate) and Dr. Peter Altorfer (member) for a three-year term of oﬃce and the election of Dr. Reto Müller,
Chairman of the Board of Directors of Helbling Holding AG, for a one-year term of oﬃce.

Confident outlook for the business year 2011
Focus on growth and further increase in net income
The new year has gotten oﬀ to a good start, and we see further growth potential in most of our markets. The
investments in growth markets made in recent years are now being reﬂected in higher sales and earnings. We
will step up our eﬀorts in the coming years in order to strengthen our presence in these regions.
Assuming no negative change in the current economic environment, especially as regards currencies and theeconomy in the industries and geographic regions relevant for our business, and assuming that the prices
and availability of the raw materials we need remain at around current levels, we expect sales and Group proﬁt
from operations to increase further in the 2011 business year.

Thank you
A word of thanks to our employees, customers, partners, and investors
On behalf of the Board of Directors and the Executive Board, we wish to thank all our employees for their
ongoing commitment and their dedication in challenging times. We also wish to express our gratitude to ourloyal customers, suppliers, and other business partners for the conﬁdence they have placed in us over the
past year and to you, dear shareholders, for your loyalty to our company.

Baar, March 2011

Dr. Albert Gnägi
Chairman of the Board of Directors

This E. Schneider
Delegate of the Board of Directors and CEO

10

Financial calendar
Ordinary General Meeting:
Publication of Half-Year Report 2011:
Publication of Annual Report 2011:

April 29, 2011
August 16, 2011
March 20, 2012

11

Annual Report2010
At a glance
Forbo in figures
Record high result for Forbo
Sustainable value creation

13
16
20
26

Activity report
Focus topics 2010
Three divisions – three areas of competenceFlooring Systems:
Sales organization strengthened
Bonding Systems:
Successful focus on strategic market segments
Movement Systems:
Fit for new challenges

29
30
33
34

Executive BoardGroup structure 
Board of Directors

Organization

53
54
57
58

The Forbo share

61

Corporate governance report

65

Forbo Group financial report

83
84
85
86
87
88
89
103
138
142
144
145

Financial statements for Forbo Holding Ltd

147
148
149
150
157
158

Consolidated balance sheetConsolidated income statementComprehensive income statement
Consolidated shareholders’ equity
Consolidated cash flow statementNotes – accounting principles
Notes
Group companies
Report of the statutory auditor
Consolidated income statements 2006 – 2010
Consolidated balance sheets 2006 – 2010

Income statement
Balance sheet
Notes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

40
46

12

13

At a glance

Forbo in figures
Record high result for Forbo
Sustainable value creation

16
20
26

14

2010 at a glance

15

Forbo is a leading
producer of floor
coverings, adhesives, as well as­power transmission
and conveyor belt
solutions.
The company employs some 6,000 people and has an international network of 41 sites with production and distribution as well
as 47 pure sales organizations in a total of 35 countries worldwide. Forbo is headquartered in Baar in the canton of Zug, Switzerland.

16

Forbo Annual Report 2010 – At a glance

Forbo in figures

Forbo is a global player, and its three divisions supply a wide range of industries. The
Group’s global reach means that it is close
to dynamic markets and makes it the first
choice as a local partner for customers thathave similar global ambitions. The quality,
long life and performance of our products
and systems reflect the quality and stabilityof our relations with our business partners.

Flooring Systems
12 production facilities in 6 countries andsales offices in over 20 countries
Bonding Systems
20 production facilities in 12 countries andsales offices in over 20 countries
Movement Systems
9 production facilities in 8 countries andsales offices in over 25 countries

Forbo Annual Report 2010 – At a glance

Net sales
EBIT 		EBIT margin
Group profit






17

CHF 1,789.7 m
CHF 185.9 m
10.4%
CHF 163.3 m

18

Forbo Annual Report 2010 – At a glance

Net sales by division
Change on previous year

Flooring Systems
Bonding Systems
Movement Systems
Total

CHF m 2010
873.9
584.7
331.1
1,789.7

in %
– 3.4
3.0
6.6
0.4

in localcurrencies in %
2.2
9.5
10.8
6.0

In % of total
48.8
32.7
18.5
100.0

Number 2010
2,738
1,384
1,780
41
5,943

Change onprevious year in %
– 0.4
0.6
– 0.7
0.0
– 0.3

In % of total
46.1
23.3
30.0
0.6
100.0

48.8%
Flooring Systems
Bonding Systems
Movement Systems

18.5%

32.7%

Employees by division

Flooring Systems
Bonding Systems
Movement Systems
Corporate Functions
Total
0.6%

46.1%
Flooring Systems
Bonding Systems
Movement Systems
Corporate Functions

30.0%

23.3%

Forbo Annual Report 2010 – At a glance

19

Financial overview Group

Income statement
Net sales
Flooring Systems
Bonding Systems
Movement Systems
EBITDA
EBITGroup profit

2010
CHF m
1,789.7
873.9
584.7
331.1
244.3
185.9
163.3

2009
CHF m
1,782.4
904.4
567.5
310.5
188.6
121.8
76.1

2010
EUR m1)
1,294.3
632.0
422.8
239.4
176.7
134.4
118.1

2009
EUR m1)
1,177.7
597.6
375.0
205.2
124.6
80.5
50.3

Balance sheet
Total assets
Operating assets
Shareholders’ equity
Net debt

CHF m
1,494.2
1,251.9
729.7
43.6

CHF m
1,745.4
1,419.7
679.6
255.1

EUR m1)
1,080.6
905.3
527.7
31.5

EUR m1)
1,153.3
938.1
449.1
168.6

Cash flow statement
Cash flow from operating activities
Cash flow from investing activities
Free cash flow

CHF m
188.0
74.3
262.3

CHF m
213.3
– 23.8189.5

EUR m1)
136.0
53.7
189.7

EUR m1)140.9– 15.7
125.2

%
13.7
48.8
6.0

%
10.6
38.9
37.5

Number
5,943

Number
5,958

Ratios per share
Earnings (undiluted)
EquityDividend

CHF
71.64
320.0
12.02)

CHF
33.67
300.7
6.03)

EUR1)
51.81
231.4
8.7

EUR1)
22.25
198.7
4.0

Stock market capitalization (as at December 31)
Stock market capitalization4)

CHF m
1,380.0

CHF m
770.6

EUR m1)
998.0

EUR m1)
509.2

Key ratios
ROS (EBITDA/net sales)
Equity ratio (shareholders’ equity/total assets)
Gearing (net debt/shareholders’ equity)
Employees (as at December 31)
Employees

1) Euro values translated at the average annual exchange rate of
CHF 1.3828/1 EUR (2010) and CHF 1.5134/1 EUR (2009).
2) The Board of Directors proposes to the Ordinary General Meeting of April 29, 2011
the distribution of a dividend in the amount of CHF 12.00 per registered share.
3) Approval of a dividend of CHF 6.00 per registered share at theOrdinary General Meeting of April 23, 2010.
4) Total number of shares in circulation, multiplied by year-end share price.

20

Forbo Annual Report 2010 – At a glance

Record high resultfor Forbo
After two very challenging years amid dif­ficult market circumstances, in which theGroup nevertheless posted satisfactory figures, Forbo posted a record result in the
successful year under review. The economic recovery in key customer segments andthe Group’s long-term endeavors to de­velop markets and a product portfolio that­delivers added value to customers led tosolid growth in 2010.
These efforts, combined with structural adjustments made in the past two years aswell as the omission of the integration andrestructuring costs from the previous year,
produced a record result. All three divisions increased earnings substantially andposted significantly higher operating profit
margins. The Group profit of CHF 76.1 million in 2009 more than doubled to CHF
163.3 million (including extraordinary revenue of CHF 32.2 million from the sale ofRieter shares).

Solid top line growth hampered bystrong Swiss franc
In the year under review, Forbo generated net sales of
CHF 1,789.7 million, which was 6.0% higher than in2009 in local currency terms. Owing to the strong
Swiss franc, however, top line growth was negatively
impacted by 5.6% so that sales in the corporate­currency were up by 0.4% (previous year: CHF 1,782.4
million).
The Flooring Systems division reported sales of CHF
873.9 million in 2010, equivalent to top line growth inlocal currencies of 2.2% year-on-year. However, negative currency effects of 5.6% pushed down sales by
3.4% in Swiss francs (previous year: CHF 904.4 million).
The Bonding Systems division generated sales of CHF
584.7 million in 2010; in local currencies, this marked asignificant increase of 9.5% versus the previous year. In
Swiss francs, however, top line growth in the corporate
currency fell to 3.0% (previous year: CHF 567.5 million)
owing to negative currency effects of 6.5%.
The Movement Systems division generated sales of
CHF 331.1 million in 2010, equivalent to a substantial
increase of 10.8% in local currencies versus the previous year. In Swiss francs, however, top line growth in
the corporate currency came to 6.6% (previous year:
CHF 310.5 million) owing to negative currency effects
of 4.2%.

21

Net sales by geographic area
Change on previous year

North, Central and South America
Asia/Australia/Africa
FranceGermany
Benelux
Great Britain/IrelandSouthern Europe
Scandinavia
Eastern Europe
Switzerland
Total

%
23.5
13.3
12.5
11.3
10.7
8.0
7.5
6.9
4.2
2.1
100.0

in %
7.1
19.8
– 10.3– 1.6– 13.4– 11.3
4.1
1.8
13.1
2.0
0.4

in local currencies in %
10.5
20.3
– 1.8
7.7
– 5.2
– 6.1
13.4
3.1
20.9
2.2
6.0

Operational performance improvedin all divisions
All three divisions reported a substantial improvementin operating profit before depreciation and amortization (EBITDA) in 2010. Compared with the previous
year, EBITDA rose by 29.5% from CHF 188.6 million to
CHF 244.3 million. A number of factors spearheaded
the Group’s sustainable growth in profitability: thestructural adjustments made in 2008 and 2009 tocounter the economic downturn, the successfully implemented measures to increase efficiency, and new
and impressive products with greater added value.
Flooring Systems lifted EBITDA substantially despite
moderate sales growth, owing to the omission of the

CHF m
2010
420.2
238.0
223.7
202.1
191.5
143.6
133.2
123.8
75.4
38.2
1,789.7

50

100

150

200

250

300

350

400

450

integration and restructuring charges from the previous year, measures to boost efficiency, and a concerted effort to prune low-margin sales. The considerable
sales increase in the Bonding Systems division did nottranslate into a corresponding EBITDA growth becauseof bottlenecks in the supply of raw materials and thesteep rise in raw material prices in the second half of2010. Movement Systems reported a big increase in
EBITDA on the back of the encouraging sales trend,­efficiency gains and the omission of the restructuring
charges from the previous year. The entire Forbo Group
lifted its EBITDA margin by 3.1 percentage points from
10.6% to 13.7%, with all three divisions reporting a substantial improvement.

22

Forbo Annual Report 2010 – At a glance

EBITDA by division
Flooring Systems
Bonding Systems
Movement Systems
Corporate

CHF m
2010
164.6
51.2
38.5
– 10.0Compared with the previous year, depreciation andamortization fell by CHF 8.4 million to CHF 58.4 million
in the year under review. The drop in depreciation andamortization resulted from the conservative investment policy in 2008 and 2009 and from the absenceof amortization in connection with the acquisition of
Bonar Floors. The Forbo Group lifted its operating profit (EBIT) by an impressive CHF 64.1 million to CHF 185.9
million on the back of these positive factors. Thisequates to a significant increase of 52.6% versus theprevious year. The EBIT margin increased from 6.8% to10.4%.

Change onpre­vious year in % – 25
20.7
8.5
158.4
1.0

0

25

50

75

100

Taxes and financial result
Taxes were further optimized in the year under review
by making use of the available loss carry-forwards. The
tax rate was 24% versus 25% the previous year.
Net financial expenses fell by CHF 6.3 million to CHF
14.1 million owing to the fall in the interest rate level,
the reduction in debt and ongoing efforts to optimize
liquidity in the Group. The Forbo Group realized substantial financial income of CHF 43.0 million from thesale of securities.

125

150

175

23

Free cash flow
Cash flow from operating activities
Cash flow from investing activities
Free cash flow

CHF m
2010
188.0
74.3
262.3

CHF m
2009 – 50
213.3– 23.8
189.5

Positive free cash flow trend
Cash flow from operating activities came to CHF 188.0
million in the year under review, while cash flow frominvesting activities was CHF 74.3 million. The latter figure includes, besides investments in production plants,
cash inflow amounting to CHF 92.6 million from thesale of securities. Free cash flow came to CHF 262.3 million in the year under review (previous year: CHF 189.5
million).
Decline in total assets and increase in­shareholders’ equity
Total assets as per December 31, 2010 stood at CHF
1,494.2 million (previous year: CHF 1,745.4 million). The
CHF 251.2 million decline in total assets versus the­previous year was due mainly to the sale of securities
as well as exchange rate effects.

0

50

100

150

200

250

300

Net debt at year-end 2010 fell substantially to CHF
43.6 million (previous year: CHF 255.1 million) thanks
to the ample free cash flow that the Group generated.
­Shareholders’ equity increased in the same period to
CHF 729.7 million (previous year: 679.6 million), whichbrings the equity ratio to a healthy 48.8% (previous
year: 38.9%).
Gearing (the ratio of net debt to equity) at the end of­December 2010 stood at 6.0% (previous year: 37.5%).

24

Forbo Annual Report 2010 – At a glance

Investment policy geared to economic conditions
The Forbo Group maintained its policy of gearing­investment to the economic environment. Capital­expenditure was concentrated on important activities
and projects aimed at boosting efficiency and pen­etrating new markets. Accordingly, investments inproperty, plant, and equipment in 2010 came to CHF
37.3 million, a marginal decrease in investment volume
compared with the previous year’s figure of CHF 38.9
million. In the reporting period, Flooring Systems invested CHF 20.0 million, CHF 2.9 million more thanthe previous year (CHF 17.1 million). This spending was
earmarked for new manufacturing processes in the
Netherlands and in Great Britain that are designed to

expand the product range, modernize production
plants, and boost efficiency. At Bonding Systems, investments in 2010 came to CHF 11.4 million versus
CHF 9.3 million the previous year. This amount wasused mainly for the construction of a new production
facility in southern China, general measures to boost
efficiency, the development of new technologies, andthe expansion and development of markets. At Movement Systems, investments came to CHF 5.9 million,
which was lower than the previous year (CHF 12.1
­million). The investments were employed primarily tomodernize, centralize and streamline production, increase productivity, and expand into new markets andcustomer segments.

Capital investment 2006 – 2010

2010
2009
2008
2007
2006

Flooring
Systems
CHF m

Bonding
Systems
CHF m

Movement
Systems
CHF m

Corporate
CHF m

Total
CHF m

20
17
29
26
18

11
9
11
21
31

6
12
17
14
13

0
1
1
1
3

37
39
58
62
65

10

20

30

40

50

60

70

25

Headcount development
At the end of the year, Forbo had a headcount of 5,943
people. That is altogether 15 employees less than theprevious year. The large percentage decrease in headcount in Germany, in Switzerland, and in Scandinavia

resulted from the structural adjustments in these markets. The increases in the other markets were driven
primarily by the expansion of sales and distribution­organizations and the generally higher level of sales in
Bonding Systems and Movement Systems.

Employees by geographic area
Benelux
North, Central and South America
Asia/Australia/Africa
Germany
Great Britain/Ireland
FranceEastern Europe
Southern Europe
Switzerland
Scandinavia
Total

%
19.4
14.8
13.3
12.4
11.8
10.8
6.0
4.4
3.5
3.6
100.0

Change onpre­vious year in %
7.3
4.2
1.8
– 6.3
0.5
– 2.9
4.1
– 1.7
– 6.6
– 26.1
– 0.3

2010
1,155
880
790
738
703
644
359
260
210
204
5,943

200

400

600

800

1,000

1,200

26

Forbo Annual Report 2010 – At a glance

Sustainablevalue creation
Social responsibility and environmental
protection are fundamental Forbo values.
We are committed to protecting the en­
vironment and investing in a sustainable­future. As a responsible manufacturer andemployer, Forbo sets very high standards
for health, safety, the environment andquality. Innovative ideas and research anddevelopment are therefore part and parcelof the forces driving our business concept.
We make full use of our potential by iden­
tifying the challenges of a constantly changing environment and adapting to them.

Social dimension
Following the Group-wide standardization of the mostimportant human resources tools and processes whichwere introduced two years ago, Forbo launched an­internal management training program in 2010. In thepast year, for the first time, Forbo offered a practiceoriented training program for senior managers, people
in key positions, and junior managers at Group level incooperation with the University of St. Gallen, other external partners and internal specialists. The program
consists of various modules that are prepared according to the needs of the target groups. The aim is tostrengthen their leadership and management skills
so that they are equipped to meet the ever more­demanding managerial challenges and make a directcontribution to the sustainable success of Forbo. These
one-week programs met with a high level of acceptance and were rated by all participants as exceptionally valuable and inspiring.
Ecological dimension
Preserving the environment and generating ecological
added value is a decisive factor in all Forbo’s devel­
opments and investments. The three divisions perma-

27

nently endeavor to optimize processes as well as toreduce and, where expedient, to recycle offcuts so as
to decrease Forbo’s environmental footprint. Flooring
Systems has an intrinsically environmentally friendly
product in linoleum, which is made from purely naturaland renewable raw materials. Also in the year underreview, a number of ecological initiatives were implemented and investments were made to develop environmentally friendly products.
In 2010, all three divisions implemented measures toreduce and optimize energy consumption. There weremany such initiatives. Here are a few concrete examples.
Flooring Systems installed a new filter system forthe manufacture of vinyl flooring which substantiallyscales back energy consumption. As a result, it saves
700,000 cubic meters of natural gas annually, theequivalent of the gas consumed by 300 households.
At the same time, the filter system reduces annual
CO2 emissions by 1.2 million kilograms.
Certain production processes of Bonding Systems require energy for cooling and energy for heating or­ rying the adhesives in the very same process. Todmake more efficient use of this energy, the division
streamlined its production processes in Europe, leading to energy savings of over 2 percent.
At Movement Systems, production processes were reengineered to reduce specific energy consumption on
the one hand and to raise production efficiency on theother hand. Heat from a new exhaust air treatment­facility, for instance, is used for heating in production
pro­cesses. The result is an annual saving of about 90
tons of CO2.
Economic dimension
As a listed company, Forbo is concerned on a daily­basis with the economic aspects of sustainability, too.
Compliance is becoming increasingly important for
the reputation and positioning of a company. In theyear under review, Forbo stepped up its efforts to­ensure compliance in the areas of code of conduct,
competition law and anti-corruption and underscoredthem in some cases with e-learning tools that havebeen launched worldwide. Steps were also taken tostrengthen risk management processes and the internal controlling system.

28

29

Activity report

Focus topics 2010
Three divisions – three areas of competenceFlooring Systems:
Sales organization strengthened
Bonding Systems:
Successful focus on strategic market segments
Movement Systems:
Fit for new challenges

30
33
34
40
46

30

Forbo Annual Report 2010 – Activity report

Focus topics 2010

To be successful in the marketplace as aGroup with three operations, each having a
different thrust, the individual divisions act
independently and flexibly, but always inline with the strategic principles governing
the entire Group. The strategy is to:– occupy leading positions in clearly definedmarket segments, based on customer focus,
a high service level and innovation– strengthen and develop the Group’s presence in growth markets– make targeted acquisitions that generate
added value for shareholders throughgreater geographic reach, product extensions or market consolidation– foster our employees through ongoingtraining and the exchange of ideas at alllevels– reinforce the strong Forbo umbrella brandglobally

Tom Kaiser
Chief Operating Officer

Spotlight on a growth mindset andprocess quality
By creating the new function of Group COO in the year
under review, we also bundled the invaluable experience of our three divisions more closely, which in turnallowed us to develop the best possible solutions.
Despite the very different focus of each division, es­
pecially with respect to customer structures, regional­priorities or technologies, we have nevertheless identified a wide range of potentials that will drive the entire
Forbo Group forward.
This applies in particular to execution at the level offunctional organizations and functional strategies.
The spotlight on a growth mindset and process quality
is part of a number of initiatives that will help tostrengthen our competitiveness.
We will forge ahead with the systematic implementation of our strategies and initiatives in 2011 too in orderto reach the targets we have set.

31

Daniel Keist

Jörg Riboni

Head Corporate Center

Chief Financial Officer

Standard of integrity as a competitive advantage
Compliance, meaning behavior of the company andits employees that is in conformity with the law at all
times, is increasingly important for the reputation andpositioning of a company.

Increasing enterprise value is at the heartof what we do
Value management is crucial to the financial management of Forbo and is an integral part of the monthly
reports of its Management Information System. The financial conferences and management training courses we held in 2010 deepened our employees’ graspof value management. The goal was – and still is – tocreate awareness of how each individual employee
can find value-driven solutions in his business environment that he can execute efficiently.

Forbo’s code of conduct was completely revised in theyear under review. The code lays down the businessprinciples and values that are valid Forbo-wide – values such as integrity, transparency and fairness. It does
not simply guarantee conduct that is in conformity
with the law, it goes far beyond this. It describes how
Forbo management and employees can and should
act not only lawfully but also ethically and with integrity and thus serves as a guideline for employees intheir day-to-day work. The code of conduct has beensystematically launched worldwide in more than ten
languages, and management training courses on thecode have been conducted employing a dedicatedmodule.
The code of conduct is thus instrumental in sharpening awareness of our responsibility towards shareholders, employees, customers and other stakeholders in
the interests of long-term and sustainable corporate
development. Forbo is confident that our standard ofintegrity is also a competitive advantage.

The two central performance indicators for assessing
value creation are the Forbo Economic Profit (FEP) and
the Return on Invested Capital (ROIC). These two ratios
do not focus entirely on the income statement but
also integrate elements from the balance sheet.
In the year under review, the Group concentrated­especially on cost-effectiveness and capital efficiency.
ROIC was significantly improved in 2010 owing tohigher profitability and strict capital management,
which made a positive and sustainable contribution to
generating value. Forbo is confident that the potential
within the Group has not yet been exhausted and thatfurther efforts will pay off.

32

ENTHUSIASMSPIRIT OF DISCOVERY

MOBILITYForbo Annual Report 2010 – Activity report

33

Three divisions –three areas of­competence
Flooring Systems

Movement Systems

The Flooring Systems division offers a broad and attractive range of environmentally-friendly linoleum,high-quality vinyl floors, entrance flooring systems forcleaning and drying shoes, carpet tiles and needlefelt.
Thanks to their excellent technical properties and attractive design, these flooring solutions are invariably
the first choice for public buildings, department stores,
hospitals and healthcare facilities, schools, libraries,
commercial offices, leisure centers, hotels, restaurants,
and cafeterias and are also used in the residential market. With a market share of over 65 percent, Forbo is
the world market leader in linoleum.

Movement Systems is a global industry leader pro­viding top-quality power transmission belts, sophisticated conveyor and processing belts, as well as plastic
modular, timing, and flat belts made of synthetic materials. These products are known under the brand name
Siegling. They are used in a wide range of applicationsin industry, trade, and the service sector, including
conveyor and processing belts in the food industry, as
treadmill belts in fitness studios and flat belts in maildistribution centers.

Bonding Systems
Bonding Systems is among the world’s leading suppliers of industrial adhesives. Its high-performance products ensure stable and durable bonding and are suitable for a wide range of applications in key markets
such as the paper processing industry, the packaging
industry, the shoe and textile industries, the furnitureindustry, as well as for manufacturing automotive andmotor home interior trims. Bonding Systems also provides ready-made adhesives for flooring installations
and ceramic tiles, as well as welding rods and levelingcompounds for the construction industry. The third
business area is synthetic polymers which are marketed as emulsion polymers to customers in the adhesives, varnish, paint, and construction industries.

34

Flooring
Systems

35

Enthusiasm

IN THE
CLASSROOM
Children, pupils, and students spend much of theirtime in educational facilities. In outfitting this school,
it was important to use only natural and robust mate­rials, wherever possible untreated. At the same time,
the flooring style had to match the school’s overall
concept and creative surroundings. Linoleum has met
the most important requirements optimally as regards
maintenance costs, sustainability, and design.

36

Forbo Annual Report 2010 – Activity report

Flooring Systems:
Sales organization strengthened“Following the integration of Bonar Floors
in 2009, the 2010 business year was oneof consolidation. In its sales activities, thedivision set clear priorities: harmonizing
the expanded product portfolio and adjusting the sales channels in order to generate
more synergies. In addition, it continued
its efforts to streamline structures and­processes. The performance of the various
markets showed a mixed picture. In someareas, sales declined because integration
activities were not yet completed and processes had not been fully optimized. Operating profit improved again thanks to theomission of integration and restructuring
expenses and to further streamlining measures. We considerably strengthened oursales organization and launched a raft ofmeasures to reinforce sales and marketingin 2010. We are now confident that we canagain assert our position as a leading system supplier for the commercial market
segment in 2011.”

The Flooring Systems division reported sales of CHF
873.9 million in the 2010 business year, equivalent totopline growth in local currencies of 2.2% year-on-year.
However, negative currency effects of 5.6% reduced
sales in Swiss francs by 3.4% (previous year: CHF 904.4
million). The division’s share of Group sales was 48.8%.
North America, Asia, as well as Southern and Eastern Europe all reported above-average growth rates,
whereas the other markets only managed to maintainthe previous year’s level or even reported slight declines in some areas owing to the weak state of theconstruction market. Operating profit (EBIT) showed astrong 33.6% increase to CHF 134.7 million (previous
year: CHF 100.8 million) despite moderate sales growth
owing to the omission of integration and restructuring
expenses and greater efforts to prune low-margin
sales. The EBIT margin rose to 15.4% (previous year:
11.1%).

Jens Schneider
Executive Vice President
Flooring Systems

Buoyant demand in North America andgrowth regions
Demand in North America grew above-average
buoyed for ecologically friendly linoleum. Satisfactorysales increases were also posted in Asia, Australia,
and South America. New building activity in Eastern­Europe, and particularly in Russia, recovered from its
low in 2009 and, along with Southern Europe, helped
drive double-digit top line growth.
The main markets in Western Europe reported moderate business activity, partly because of budgetary public spending restrictions which still impact negatively
on the key market segments of healthcare and education. Sales in Scandinavia, Central Europe, France, andGreat Britain – markets that had been exceptionallyhard-hit by the economic crisis well into 2010 – recovered especially in the second half of the year. This trend
is not yet apparent in the Benelux countries where
weak demand persists owing to the fragile state of theconstruction industry.
All strategic product groups report growth
Following a major acquisition, the division has a complete offer of flooring collections which it relaunchedin 2009. Customers have responded well to the excellent fit of the products in different building appli­
cations and areas. Using the existing ­collections asa springboard, new, complementary collections werecreated in the year under review, which are now being
launched gradually starting in early 2011.

37

Demand for linoleum was buoyant because of the­ongoing trend towards ecologically sustainable products. Heterogeneous vinyl floorings for the com­
mercial segment and entrance flooring systems forentrance areas made a positive impression and gained
market share. Flotex, a washable textile flooring whichis as homely as carpet and as easy to care for as resilient
flooring, and the high-end carpet tiles for office spaces
performed satisfactorily, bolstered by synergies fromthe streamlining of distribution structures.
Sales of flooring for the residential segment declined
as a result of portfolio adjustments. The Novilon collection launched in early 2011 will be a trend-setter in thissegment.
Investment in innovative productswith new designs
Once again in 2010, Flooring Systems invested in new
manufacturing processes to expand its innovative
range of designs and products in the areas of linoleum
and vinyl floorings. Production capacities in Sweden,
France, and the Netherlands were rationalized andbrought into line with modern manufacturing requirements.
In the Netherlands, the division invested in attractive
linoleum designs, such as a striped design, which picks
up on the current retro style trend. In France, investments were made in a new and attractive sound-­absorbing vinyl flooring collection for use mainly insocial housing. In Scotland, Flooring Systems invested
in the production of linoleum tiles, primarily for the
North American market, for use mainly in schoolrooms.
In the Netherlands, the division invested in the inhouse production of luxury vinyl tiles, which havethe feel of wood, stone or ceramic floors. These are a
key product for the retail segment, and will give fresh
growth impetus to new market segments.
Flooring Systems again made major investments inIT systems, including a new SAP-based global sales
management system, which creates complete transparency for everybody involved in global projects. An
individual ‘floorplanner‘ has been introduced on theInternet since fall 2010, enabling customers to designinteriors digitally with different floorings and wall colors to judge the potential ­effect that complex designs
and colors have in a room.

Focus on sales growth
Following the consolidation phase in 2010, Flooring
Systems anticipates strong growth in all markets for2011. Linoleum stands to benefit from the ongoing
trend towards ecologically sustainable building design.
Following streamlining of the distribution channels,
the division expects additional growth from further
synergies generated by the newly integrated productportfolios of Flotex, carpet tiles and entrance flooring
systems and by the growth stimuli from the new collection of design floorings.
In North America, Australia and Asia, Flooring Systems
expects that the positive trend will continue in 2011. In
Western Europe, an improved situation is antici­patedcompared with the previous year.

38

Forbo Annual Report 2010 – Activity report

Tiles and planks
in demand
Making products and processes more sustainable and more friendly to the environment is a priority for every change and every new development at Flooring Systems.
To achieve this, Forbo uses not only its own
internal expertise but also the various options offered by the market and society
overall. In the year under review Forbo has
again managed to make progress in this­regard with new and innovative trends tailored to the various needs of our customers.

Linoleum in tile format
With a linoleum tile product for classrooms in North
America which is unique worldwide, Flooring Systems
has created an ecological alternative to the vinyl composite tiles which have dominated this market segment up to now, but which in terms of quality tend to
be brittle and have a very high chalk content. In America, the square, linoleum-based tiles are used mainly
for classrooms where renovation and new building
have to take place within a relatively narrow time window in the school holidays in spring and summer.

39

Flooring Systems managed to convince architects andfloor installers that there is a simple-to-lay and cost-­
efficient option on an environmentally friendly basis
which can fulfill all of the requirements. Forbo is today
the world’s only manufacturer that produces and sells
linoleum in tile format. Following its success in North
America, Flooring Systems will now extend its range toother typical vinyl tile markets such as France, GreatBritain, Japan, and Australia as an ecological alternative
to provide a new ambiance in school buildings andstores.

THE WORLD’S ONLY
MANUFACTURER
OF LINOLEUM TILES

High-grade designer floors
In the area of resilient floor coverings, high-grade lux­
ury vinyl designer floors in plank and tile format are
currently the fastest-growing product category. These
are used for example in stores, hotels, and catering orother modern buildings. For the Allura collection newly introduced in January 2011 Flooring Systems developed a revolutionary process to produce vinyl sheet ina width of three meters and then cut the planks andtiles with state-of-the-art ultrasound cutting machines
to any shape or size. The planks can be up to 1.5 meters long. Special digital printing techniques generatemodern and abstract designs which have been created exclusively by Forbo. Beveled plank edges offer
added character for the widest possible range of design concepts. As they are easily laid, such planks andtile formats are also very popular with floor installers.
The new collection includes over 100 designs, sevendifferent embossing textures and a wide range of colors to allow extremely realistic wood, stone, and metal
designs. It reflects current and future trends, can fulfill
both conventional and extravagant wishes, and offers
architects, interior designers, and planners a wealthof options for the widest possible diversity of room
concepts.

40

bonding
Systems

41

Spirit of discovery

EN ROUTE
AT 3,700
METERS
Experienced mountaineers have to be able to rely on
top-flight materials and first-class quality in their clothing. In extreme sports, fabrics have to be very comfortable, water-repellent and breathable in any weather.
Adhesives from Forbo lend textiles these properties
and make them reliable companions on tours in thehigh mountains.

42

Forbo Annual Report 2010 – Activity report

Bonding Systems:
Successful focus on strategic
market segments“The approach of Bonding Systems is to­focus on developing strategic market segments and to expand and proactively support the international activities it provides
to key ­accounts, while at the same time­selectively strengthening the organization in
growth markets. The sales growth we haveachieved clearly shows that this approachhas paid off. The transport and woodworking customer segments, which were hard hit
by the economic crisis, have bounced back,while we have made progress worldwide in
the packaging industry, another of our strategic markets, as a result of our efforts to­acquire new business. The positive impact ofhigher sales was, however, offset by bottlenecks in the supply of raw materials and by
the steep rise in raw material prices in thesecond half of 2010.”

The Bonding Systems division generated sales of CHF
584.7 million in 2010; in local currencies, this marked asignificant increase of 9.5% versus the previous year. In
Swiss francs, however, sales growth in the corporate
currency came to 3.0% (previous year: CHF 567.5 million) owing to a negative currency effect of 6.5%. The
division’s share of Group sales reached 32.7%. The solid
growth was driven mainly by the industrial adhesives
business. All regions recovered from the difficult economic environment in the previous year, especiallysegments such as transport, woodworking and textiles,
which had been hard hit by the crisis. However, the effect of the encouraging sales growth is not fully reflected in the result because margins were eroded by bottlenecks in the worldwide availability of raw materials
along with a steep rise in raw material prices, which
could only be passed on to customers in part or witha time lag. The division nevertheless lifted operating
profit (EBIT) by 15.6% to CHF 37.7 million (previous
year: CHF 32.6 million). The EBIT margin increased to
6.4% (previous year: 5.7%).

Michel Riva
Executive Vice President
Bonding Systems

Industrial adhesives make a bigger-than-averagecontribution to growth
The industrial adhesives business recovered strongly
in the year under review from the global economic
downturn in previous years. Underlying this upturn
was the strong growth reported in all geographic regions, particularly Asia, the Middle East, and Eastern
Europe. In Europe and North America, the above-­average growth rates in the first half firmed at a somewhat lower level in the course of the fourth quarter.
Generally speaking, demand in the customer segments of transport, woodworking, and packaging rosesignificantly.
Owing to the challenging market conditions in the­European construction industry, demand for building
and construction adhesives was up only marginallycompared with the previous year’s level. This affected
mainly Benelux, which accounts for the lion’s share ofsales. Russia and Eastern Europe, by contrast, benefited
considerably from the rebound and from earlier efforts
to develop the market.
The synthetic polymers business bounced back; overcapacity in this market was reduced as a result of
the economic upswing in North America, and the­adhesives and construction industry markets reported
a recovery in demand for synthetic polymers. Newly
developed market segments for applications in the
carpet and paint industries provided further support
for this trend.

43

Advanced hotmelts in demand
Demand in the market segments of packaging, la­beling, transport, and woodworking posted above-­average growth worldwide. Accordingly, demand wasbuoyant for many different types of adhesives, which
are delivered mainly to these industries. In particular,
the beneficiaries were polyurethane and polyolefin­hotmelts, which are used in woodworking, the automotive industry, and packaging, as well as in the manufacture of sandwich elements. Water-based adhesives
are employed for labeling and in the packaging andwoodworking industries. Adhesive-coated tapes werein heavy demand by packaging manufacturers.
Investing in new product technologies
Bonding Systems particularly invested in developing
new product technologies in the year under review inorder to be at the forefront of new market devel­
opments and be able to offer innovative products for­professional cooperation with major customers. The
division installed a new production line for thermoplastic hotmelts for the packaging industry in Spainand built a new assembly line for parquet adhesives in
its building and construction adhesives business inGermany.
In fall 2010, Bonding Systems inaugurated its new production plant for industrial adhesives in Guangzhou,
southern China, where there is also a new research anddevelopment center for the whole Asian region. The
important market segments in Asia are the hygiene,
packaging, woodworking, textile, and automotive industries.
To meet rising demand for industrial adhesives, the­distribution and technology teams were bolstered in
Russia and Eastern Europe, where they can provide
support for long-established major accounts in the
woodworking and packaging industries.

Creating innovative and environmentallyfriendly applications
In the year under review, a number of new applications were developed in close cooperation with ourcustomers. These applications are superior in terms of
their environmental footprint and generate added
value for our manufacturing partners. Bonding Systems developed a new generation of water-based­adhesives for high-speed applications in processing
folding cartons. This raises productivity among the
manufacturers while at the same time reducing downtimes and, ­consequently, maintenance costs. A thermoplastic polyolefin hotmelt was developed for the
packaging industry that adheres at lower temperatures than conventional adhesives. This leads to a substantial reduction in energy costs during production.
The building and construction adhesives businesslaunched new applications with low-dust products forleveling compounds and ceramic tiles, thereby reducing health hazards in the laying of flooring.
In the year under review, Bonding Systems also
launched a comprehensive range of low-emission adhesives, certified to the standard of the GreenguardTM
environmental institute. This institute is concernedwith improving health and quality of life, in particularby ensuring better air quality in production rooms.
Availability and price of raw materials are
ongoing challenges
Generally speaking, Bonding Systems is assuming that2011 will see further above-average growth in theemerging markets of Asia and the Middle East. North
America and Europe are expected to post slightly more
moderate growth rates owing to the economic situation. Bonding Systems expects to boost sales growthby systematically concentrating on international majorclients in the strategic market segments and by developing new product applications with these industries
in mind.
The biggest challenge will be to offset the rise in raw
material prices and to ensure reliable and uninterrupted delivery at competitive prices despite raw material
bottlenecks.

44

Forbo Annual Report 2010 – Activity report

Adhesives can also
be environmentallyfriendly
Adhesives have been around for a long timeand have developed to become complex adhesive systems which are present but invisible everywhere in our daily lives. Bonding
Systems works closely with customers as
a competent partner worldwide to jointly
develop new approaches and solutions forinnovative adhesives to optimize production processes and thus create added value
for all concerned.

New generation of hotmelt adhesives
Hotmelt adhesives are solid at room temperature. They
are heated up and applied by spraying or rolling onto
the adhesive surface and form a bond as they cool
down. Depending on their properties, they are used indifferent industries. In the year under review Bonding
Systems introduced a new generation of polyolefinbased hotmelt adhesives. In the first step, these
are aimed at the packaging industry where they will
replace the traditional ethylene vinyl acetate-based
products which have been in use for over twenty years.
This new adhesive generation offers significant added
value for the processing customers and is practicallyodor-free. Due to the lower processing temperature,energy consumption can be generally reduced, theproduction machine parts are less likely to burn out,
there is no soot, and threading is reduced in the heated adhesives. This reduces downtimes as well as thecosts for replacement parts. Due to the excellent flow
characteristics of the hotmelt adhesive, lower weightand better adhesive properties within a large operat-

45

ing temperature window, the consumption of adhesive can be reduced by up to 30 percent. As an extremely versatile adhesive it will be used in the firstphase mainly in the packaging sector for cardboard
materials, for example for deep-frozen products or
cookies. Other typical application areas include bookbinding, labeling or woodworking.

INNOVATIVE ADHESIVESOLUTIONS FOR
TOP PERFOrMANCE

Sustainable building certificate for tile adhesive
The demand for environmentally friendly products is
also increasing in the building and construction adhesives sector. New technologies have made it possible
to develop building and construction adhesives with
30 percent recycled material which are suitable for awide range of application areas. In the year under review Bonding Systems launched a new tile adhesive
which has been certified with the DUBOKEURR seal of
quality for sustainable construction. It was evaluatedaccording to the lifecycle method in relation to theecological balance sheet on the basis of 17 environmental criteria, from the production phase right up towaste disposal. In spring 2010 a unique self-levelingcompound which can be applied to the surface without any primer was also introduced. The advantageof this new cement-based product is its substantiallyreduced dust development. It is gentle on the environment and on the health of the people working with it,
as the inhalation of tiny dust particles is minimized.

46

Movement
Systems

47

Mobility

AT THERIGHT PLACE
AT THERIGHT TIME
Conveyor belts provide smooth baggage handlingat airports and an efficient flow in the distribution of­small and large packages in logistics centers withstate-of-the-art equipment. It’s all about movement
and connection. The new, energy-saving conveyor belt
from Forbo demonstrably cuts energy consumption
by up to 40 percent, and that substantially lowers operating costs and reduces CO2 emissions.

48

Forbo Annual Report 2010 – Activity report

Movement Systems:
Fit for new challenges“Following very intensive years in a challenging market environment, the situation
turned around significantly in 2010. The
structural measures taken in the past two
years created a solid foundation for sustainable, double-digit sales growth plus
a substantial increase in operating profit.
Our success was driven by our flexibility in
executing customer wishes professionally,
our investments in growth markets andnew product areas, the worldwide recovery
in the plant engineering and machine tools
sector, plus the generally improved market
situation in many of our customer segments. The operating profit we achieved isall the more gratifying as many raw material prices shot up in the second half of2010 and the world’s markets sufferedfrom bottlenecks in the delivery of raw­materials.”

The Movement Systems division generated sales of
CHF 331.1 million in the year under review, equivalent
to a substantial increase of 10.8% in local currencies
versus the previous year. In Swiss francs, however, topline growth in the corporate currency came to 6.6%
(previous year: CHF 310.5 million) owing to negative
currency effects of 4.2%. The division’s share of Groupsales was 18.5%. This satisfactory growth was driven inpart by an upswing in those markets that had sufferedfrom the economic crisis the previous year: the European and East Asian plant engineering and machine
tools sector, with a high share of capital goods for­international export, and the growth markets, especially China and India. Since production output has rebounded strongly, the important spare parts businessof Movement Systems also recovered. Owing to thissatisfactory sales trend and the omission of the restructuring expenses from 2009, operating profit (EBIT) in2010 increased by a significant CHF 25.0 million froma barely positive CHF 0.5 million the previous year to
CHF 25.5 million. The EBIT margin also rose steeply to
7.7% (previous year: 0.2%).

Matthias P. Huenerwadel
Executive Vice President
Movement Systems

Better-than-average growth in Europe and Asia
Sales growth in Asia was exceptionally good, in part
because of the boom in the Chinese economy and astrong local organization, which has made its markin the important project business of the tobacco and­logistics sectors. Owing to the strong rebound in theplant engineering business in Europe, where Movement Systems has an important presence, the sector’ssales showed double-digit growth in most countries.
The recovery was hesitant in Scandinavia, France, andSpain. North America turned in a steady performance.
The Amp Miser product family, which substantially reduces energy consumption by lowering friction on theunderside of the belt, has now become established as
the standard in the North American logistics market invarious applications with very good growth rates.
Growth markets such as India, Russia, Central andSouth America and Southeast Asia reported significant
sales increases, driven by expansion of the division’s
own activities, an area where potential has not yet
been exhausted. India, which has developed its own
local organization, performed very well mainly in textiles thanks to its niche strategy.

49

Innovative product portfolio fosters growthin core segments
The various customer segments of Movement Systems
have by and large also recovered from the global economic recession. The food-processing industry continues to grow steadily worldwide. In particular, the products launched the previous year featuring innovative
hygienic belt-edge sealing generated above-average
demand growth. Sales in the textile segment trended
very firmly owing to the establishment of a new product line. The customer segments of logistics, industrial
production, and raw materials recorded strong growth,which was driven mainly by the global economic recovery. Only the paper and printing business remains
mired in a difficult market environment.
The strategic development of the plastic module belt
business proved very successful. Among the main customer segments are the food-processing industry andthe automotive industry. The product portfolio was
specifically expanded again in the year under review,and the growing organization was outfitted with newtools and machines for production and assembly.
Market success with belts for the
textile industry
The launch of a new product line of belts for printing
textiles such as bed sheets and table cloths as well as
high-class neck scarves, outerwear and ties was a success. Many years of development work, along with expanded know-how and targeted services, have gone
into establishing this product group in key markets
such as China, India and Taiwan.
Investment in growth markets andproduction capacity
Movement Systems focused mainly on strategic projects in the year under review.
By adjusting structures to the market environment inearlier years, Movement Systems also optimized theassembly supply chain. It created a clear allocation ofroles for the three main regions of Europe, America,and Asia-Pacific as regards central assembly and warehousing sites, bringing them into line with the shortterm assembly requirements of the local sales com­panies.

The worldwide introduction of a standardized SAP­solution and a standardized customer relationship­management software in all companies supports
across-the-board optimization of the division’s core
processes.
The new, five-meter-wide coating plant in the centerof excellence for conveyor and processing belts in Germany was successfully brought on stream in the firsthalf of 2010. This complex installation secures technology and quality leadership for Movement Systems andis able to deliver the required capacity over the longterm.
India built up its own business activity through major
investments in local sales, service and assembly ca­
pacity.
Market leadership thanks to a greater focus
on global organization
After years of consolidation and adjustment of structures to the market environment, Movement Systems
is organizationally geared in 2011 to meeting future
customer needs. Recasting the division as a worldwide
functional organization will link key cross-unit processes so that they are leaner, more efficient, and moreglobal. This affects mainly the core functions of innovation, roll production, and assembly. At the same time,the division aims to strengthen its local sales and service capability in order to meet the market challengesof the future and sustainably drive forward its leading
market position.
Generally speaking, Movement Systems anticipates amore stable market environment in 2011. The expansion in growth markets in earlier years plus the investments in innovative product developments are a solid
foundation for further growth potential.

50

Forbo Annual Report 2010 – Activity reportInnovations
bear fruit
Not always visible, but present almost­everywhere, Movement Systems is making
sure that a wide range of production processes run smoothly. Forbo distinguisheditself again in the year under review as
a competent partner in the developmentof application-specific and future-oriented
solutions for driving, conveying, and producing.

Belts for the textile industry in growth markets
Movement Systems has continually extended its expertise in the area of printing blankets for the textile
industry. Long years of development work, differentiated services for installation and in after-sales service,
as well as the introduction of a new product series inthe year under review have made an above-averagecontribution towards growth, particularly in Asian markets such as China, India, Indonesia and Taiwan. These
printing blankets are used in systems for the printingof textiles, such as bed sheets, tablecloths or highquality scarves and fabrics for outer garments and ties.
There is also a trend towards individually designed advertising banners and flags. Depending on their texture, different techniques are used to print these materials. The printing blankets can be up to 130 meters
long and 4.3 meters wide. The task of each belt is toconvey the sheet of material as regularly as possible
from the first to the last print station, whether in rotary,
screen or digital printing. Maximum precision is required for this as only one ink is printed at each station.
In order to receive a filigree color pattern, for example,
up to 28 print stations with different inks may be used.
The conveyor belt thus has a decisive influence on thequality of the textile print.

51

Competitive advantage in food processing
Safety in the food production process and thus protection of the consumer against food contamination are
becoming increasingly important. Accordingly, a new
EU hygiene directive requires additional certificationof the raw materials suppliers and the examination of
new alternative raw materials for conveyor belts whichcome into contact with unpacked food in the production process. All of the constituent elements of a belt
have to be on the positive list of the EU and comply
with certain limit values depending on the material
and the properties of the food to be conveyed (watery,greasy, milky). The corresponding seal was introducedin the product documentation as a sign of conformity
with these new regulations. In recent years Movement
Systems has continuously invested in innovative belt
surfaces and belt edge seals for the food processing
industry and developed the corresponding specificknow-how. The experience gained from these new­ evelopments for the processing of meat, fish, bakerydproducts, milk products, fruit, and vegetables gives
Forbo significant competitive advantages.

COMPETITIVE­ADVANTAGE
THROUGHINNOVATION

52

53

Organization

Executive BoardGroup structure
Board of Directors

54
57
58

54

Forbo Annual Report 2010 – Organization

Executive Board

Matthias P. Huenerwadel, Jörg Riboni, Tom Kaiser, Jens Schneider, This E. Schneider, Daniel Keist, Michel Riva

55

This E. Schneider

Jörg Riboni

This E. Schneider, born 1952, is a Swiss citizen. He studied economics at the University of St. Gallen (lic. oec.
HSG) and at the Graduate School of Business, Stanford
University, California, USA. After holding various management functions in Europe and the USA, he joined
the Executive Board of Schmidt Agency, where he was
responsible for strategic planning, operations and logistics from 1984 to 1990. From 1991 to 1993, he was
Chairman and CEO of the listed company SAFAA, Paris.
In 1994, he became a member of the Executive Boardof Valora, with responsibility for the canteen and ca­
tering division. From 1997 to 2002, he was Delegate
and Vice President of the Board of Directors of SelectaGroup. This E. Schneider has been Delegate of theBoard of Directors and CEO of the Forbo Group since
March 2004. In addition, he is a member of the Boardof Directors of Galenica SA, Rieter Holding AG and­Selecta AG.

Jörg Riboni, born 1957, is a Swiss citizen. He studied
economics at the University of St. Gallen (lic. oec. HSG)
and is a Swiss certified public accountant. After holding various positions in the auditing and consultancy
sector, Jörg Riboni joined the Cosa Liebermann Group
where he was Head of Controlling and Finances for
the European division. In 1995, he was appointed Chief­Financial Officer of Jelmoli AG, which was sold at theend of 1996. From 1997 to December 2005, he was
Chief Financial Officer of Sarna Kunststoff Holding AG
in Sarnen. Jörg Riboni joined the Forbo Group in January 2006. He is a member of the Executive Board andChief Financial Officer.

Delegate of the Board of Directors and CEO

Tom Kaiser

Chief Operating Officer, Executive Vice President
Tom Kaiser, born 1956, is a German citizen. He completed his commercial apprenticeship in wholesale
and export sales at Stahlwerke Südwestfalen in 1978.
In 1992, he completed the International Executive Program at INSEAD, Fontainebleau, France. From 1979 to
1988, he worked for Krupp Handel GmbH in North andSouth America and other locations. From 1988 to 1998,
he held various management positions with Vaillant
GmbH. In 1998, he joined the Wolf Group as Managing
Director. From March 2004 until March 2010, Tom­Kaiser was Executive Vice President Flooring Systems
and member of the Executive Board. He was appointed as COO of the Forbo Group on April 1, 2010.

Chief Financial Officer, Executive Vice President

Daniel Keist

Head Corporate Center, Executive Vice President
Daniel Keist, born 1957, is a Swiss citizen. He studied
economics at the University of St. Gallen (lic. oec. HSG)
and joined UBS in Zurich in 1984, where he was Managing Director and Co-Head of the Corporate Finance
Equity Advisory unit. From 1998 to 2001, he was amember of the Executive Committee and CFO of theSelecta Group. He was then a partner at Ernst & Young
Corporate Finance in Zurich until 2003, where he was
responsible for various M & A, restructuring and financing transactions. Until the summer of 2007, he was amember of the Executive Committee of SIX Swiss Exchange and headed the Admissions division. Daniel
Keist has been a member of the Executive Board sinceAugust 2007 as Head Corporate Center.

56

Jens Schneider

Matthias P. Huenerwadel

Jens Schneider, born in 1956, is a German citizen. He
completed his BSC Hons in geology and chemistry at
the University of the Witwatersrand in Johannesburg
in 1978 and then did his Master of Science at Imperial
College London in 1984. After working in the mining
industry in South Africa and Europe, he joined S.G. Warburg Securities in London in 1987 as a financial analyst
for two years. From 1989 on he headed international
investment projects for the Frankfurt-based corpo­
ration Metallgesellschaft. In 1995, he moved to the­Preussag Corporation, where he held various management positions, among others in the Building
Technology unit. Jens Schneider joined the ForboGroup at the end of December 2005 where he took
over responsibility for Finance and Administration in
the Flooring Systems division. He was appointed Executive Vice President Flooring Systems and memberof the Executive Board of Forbo in April 2010.

Matthias P. Huenerwadel, born 1968, is a Swiss citizen.
He studied engineering at the Federal Institute of­Technology, specializing in manufacturing technologies and technology management. He began his professional career as an assistant to the Executive Boardof Franke Holding AG. In 1996, he moved to the USA,
where he was responsible for logistics, information
technology and customer service with Federal Home
Products, Ruston. From 1999, he held various mana­
gerial positions at Franke Foodservice Systems andmanaged its European operations from 2002 to 2005.
Matthias P. Huenerwadel took over the managementof the Movement Systems division in October 2005
and is a member of the Executive Board at Forbo.

Executive Vice President Flooring Systems

Michel Riva

Executive Vice President Bonding Systems
Michel Riva, born 1964, is a Swiss citizen. He studied
economics at the University of Applied Sciences Baseland the IMD in Lausanne, where he completed hisMBA. From 1989 to 1994 he held various financial positions at Hoffmann-La Roche. Subsequently, he headed up Strapex Corporation, Charlotte, North Carolina,
USA. From 1998 to 2004, he held various Managing­Director positions within the chemical company DuPont, latterly as Business Director Europe, Middle East
and Africa for the DuPont Powder Coatings business
unit. In October 2004, Michel Riva was appointed Executive Vice President Bonding Systems and memberof the Executive Board at Forbo.

Executive Vice President Movement Systems

Forbo Annual Report 2010 – Organization

57

Group structureThis E. Schneider
Delegate of the Board of Directors and CEO

Tom Kaiser

Jens Schneider

Michel Riva

Matthias P.
Huenerwadel

Jörg Riboni

Daniel Keist

Operations

Flooring Systems

Bonding Systems

Movement Systems

Corporate FinanceCorporate Center

Flooring Systems

Sales & Marketing

North America

Americas

Controlling

Mergers &Acquisitions

Treasury
Bonding Systems

Tax
Supply Chain

Europe 1

EuropeIT
Pensions
International

Innovation &Product
Management

Europe 2

Asia | PacificInvestor Relations

Movement Systems

Asia | PacificFinance & Services
Building
and Construction
Adhesives

Human Resources/
Pensions
Switzerland
Communications
Legal Services
Internal Audit
Risk Management

58

Forbo Annual Report 2010 – Organization

Board of Directors

Vincent Studer, Michael Pieper, Dr. Albert Gnägi, This E. Schneider, Dr. Peter Altorfer

59

Dr. Albert Gnägi
ChairmanMember and until 2010 Chairman of the Board of Trustees of the Sanitas Hospital, Kilchberg.
Chairman of the Board of Directors of SAM Group Holding AG, Zurich.
Member of other Boards of Directors or Boards of Trustees.
Elected until 2013.

Michael Pieper
Vice Chairman

Owner of the Franke Artemis Holding AG, Aarburg.
Chief Executive Officer of Franke Artemis Management AG, Aarburg.
Member of the Board of Directors of Hero AG, Lenzburg.
Member of the Board of Directors of advalTech Holding AG, Niederwangen near Berne.
Member of the Board of Directors of Berenberg Bank (Schweiz) AG, Zurich.
Member of the Board of Directors of Rieter Holding AG, Winterthur.
Elected until 2013.

This E. Schneider

Delegate of the Board of Directors and CEO
Member of the Board of Directors of Galenica SA, Berne.
Member of the Board of Directors of Rieter Holding AG, Winterthur.
Member of the Board of Directors of Selecta AG, Muntelier.
Elected until 2011.

Dr. Peter Altorfer
MemberPartner at the law firm Wenger & Vieli AG, Zurich.
Member of the Board of Directors of Huber + Suhner AG, Herisau.
Member of the Board of Directors of agta record ag, Fehraltorf.
Member of the Board of Directors of Abegg Holding AG, Zurich.
Member of the Board of Directors of Altin AG, Baar.
Member of the Board of other private and foreign banks and non-listed investment companies in Switzerland.
Elected until 2011.

Vincent Studer
MemberPartner and member of Management of T & R AG, Gümligen near Berne.
Member of the Board of Directors of Bank EEK AG, Berne.
Member of other Boards of Directors or Boards of Trustees.
Elected until 2012.

60

61

The Forbo share

62

Forbo Annual Report 2010 – The Forbo share

The Forbo share

The strong performance of the Forbo share was buoyed up by three main factors.
On the one hand, Forbo generated good operational results in 2009 and in 2010, and this was very warmly welcomed by investors in a challenging economic environment.
On the other hand, Forbo substantially stepped up its communication activities with investors in the year underreview, conducting major roadshows in the spring and summer of 2010. These meetings attracted both existingand potential investors and generally improved knowledge of the three divisions of the Forbo Group. As a resultof the higher level of communication activities, the number of analysts covering the Forbo share also increased.
Owing to these activities, plus the higher free float of Forbo stock, the average trading volume of the share­increased by about 60 percent compared with the previous year. This further enhanced the share’s attractivity.
For the second year in a row, Forbo’s stock gained more than 73 percent, closing at CHF 590 at year-end 2010 andbeating the Swiss Performance Index (SPI) by a wide margin.

The Forbo share in comparison to the SPI
750
700
650
600
550
500
450
400
350
300
250
200
150
100

54%
44%
34%
23%
13%
3%
– 7%
– 18%
– 28%
– 38%
– 49%
– 59%
– 69%
– 79%
31.12.2007

31.12.2008

31.12.2009

31.12.2010

Forbo share
SPI

63

Share capital
Issued registered shares1)
Thereof:
Shares outstanding
Share buyback second line
Other treasury shares
Reserve shares (without dividend rights)

2010
Number2,713,152

2009
Number2,713,152

2008
Number2,713,152

2007
Number2,713,152

2006
Number2,713,152

2,339,162
213,152
139,419
21,4192,266,593
213,152
211,988
21,4192,230,729
213,152
247,852
21,4192,453,379
238,354
21,4192,577,198
114,535
21,419CHF
271,315

CHF
271,315

CHF
10,852,608

CHF
37,984,128

CHF
54,263,040

233,916
21,315
13,942
2,142

226,659
21,31521,1992,142

8,922,916
852,608
991,408
85,67634,347,306
3,336,956
299,866

51,543,960
2,290,700
428,380

CHF
320
71.6
12.03)
2.05)
3.55)
17

CHF
301
33.7
6.0
1.85)
4.35)
18

CHF
250
6.9
3.9
0.64)
2.14)
57

CHF
281
44
10
1.44)
2.24)
23

CHF
246
24
6
1.24)
2.14)
25

CHF
595
343
590
1,392
802
1,380

CHF
343
140
340
777
317
771

CHF
705
188
195
1,573
420
435

CHF
722
447
700
1,770
1,097
1,717

CHF
490
291
486
1,263
750
1,253

Issued nominal capital
Total
Thereof:
Shares outstanding
Share buyback second line
Other treasury shares
Reserve shares (without dividend rights)

Data per share
Shareholders’ equity Group7)
Group profit2) 7)
Gross dividend and cash distribution
Gross dividend yield (in %)

High
Low

Payout ratio6) (in %)Stock market statistics
Share priceMarket capitalization (m)8)

1)
2)
3)
4)
5)
6)
7)

High
Low
Year-end
High
Low
Year-end

Par value per share in 2010 and 2009: CHF 0.10; 2008: CHF 4; 2007: CHF 14; 2005 and 2006: CHF 20.
See note 15 ‘Earnings per share‘ on page 111 of the Financial Report.
Proposal of the Board of Directors to the Ordinary General Meeting.
Calculated on the basis of a cash distribution in the form of a reduction in par value.
Calculated on the basis of a cash distribution in the form of a dividend.
Gross cash distribution as a percentage of Group profit.
Based on the weighted average of the number of shares as set out in note 15 ‘Earnings per share’on page 111 of the Financial Report.
8) Total number of shares outstanding, multiplied by year-end share price.

Forbo Annual Report 2010 – Corporate governance reportCorporate
governance report

66

Forbo Annual Report 2010 – Corporate governance report

Corporate
governance report
At Forbo, the concept of corporate governance encompasses the entire set of principles
and rules on organization, conduct and transparency designed to protect shareholders’interests. Forbo’s aim is to strike a careful balance between management and control. The
central rules are contained in the Articles of Association, the Organizational Regulations,and the regulations of the committees of the Board of Directors. The following information is set out in line with the Directive on Information relating to Corporate Governance(Directive on Corporate Governance “DCG”) and the relevant publications of SIX Swiss
Exchange.

Group structure and shareholders
Group structure
Forbo Holding Ltd, domiciled at Lindenstrasse 8, 6340 Baar, is a limited company under Swiss law. The holding
company holds all companies, directly or indirectly, that belong to the Forbo Group. The operational structure of
the Group is shown in the organizational chart on page 57. The consolidated group of Forbo Holding Ltd does
not include any listed companies. The unlisted companies within the consolidated group of Forbo Holding Ltd
are listed under ‘Group companies’ starting on page 138 of the financial report. The company name and domicile,share capital and percentage of participation along with information relating to the allocation of the Group companies to the Group’s divisions can also be found in this list.
Significant shareholders
As of December 31, 2010, 2,157 shareholders were listed in the share register of Forbo Holding Ltd, or 134 (7%)
more than in the previous year. At December 31, 2010, Forbo Holding Ltd knew of the following significant shareholders with a holding of more than 3%:

Michael Pieper1)
Forbo Holding Ltd2)This E. Schneider

31.12.2010
as a percentage
25.12
13.78
5.97

1) Michael Pieper holds his interest directly and indirectly through Artemis Beteiligungen I AG.
2) – First trading line: 5.928%; second trading line 7.856%.
– Forbo Holding Ltd holds its interest directly and indirectly through Forbo International SA and Forbo Finanz AG.

Disclosure of significant shareholders and significant shareholder groups and their holdings is effected in accordance with the disclosures made in the year under review pursuant to article 20 of the Federal Act on Stock­Exchanges and Securities Trading (SESTA) and the provisions of the Ordinance of the Swiss Financial Market­Supervisory Authority on Stock Exchanges and Securities Trading (SESTO-FINMA).

67

Credit Suisse Group AG reported to Forbo Holding on April 20, 2010 that it had exceeded the threshold of 3% andheld 3.255% of the voting rights indirectly via Credit Suisse Securities (Europe) Limited, Clariden Leu AG and
Credit Suisse Life (Bermuda) Ltd. On May 28, 2010, Credit Suisse Group AG reported that it had fallen below thethreshold of 3%.
Forbo Holding Ltd reported on November 25, 2010 that, as a result of selling of own shares, it had fallen below
the threshold of 15% as per November 19, 2010 and that it held 403,662 registered shares, corresponding to
14.878% of voting rights, directly or indirectly, via Forbo International SA, Baar, Switzerland, and Forbo Finanz AG,
Baar, Switzerland. In addition, Forbo Holding Ltd has granted 25,791 purchase rights for 25,791 registered sharesof Forbo Holding Ltd, corresponding to 0.951% of the total voting rights.
No other disclosures were made in 2010.
For further information on significant shareholders or shareholder groups, we refer the reader to the table on
the left side or to page 152 of the financial report (duty of disclosure pursuant to article 663c, Swiss Code of­Obligations).
Cross-shareholdings
Forbo Holding Ltd has not entered into any cross-shareholdings with mutual capital shareholdings or voting
rights.

Capital structure
Share capital
As of December 31, 2010, Forbo Holding Ltd had a fully paid up share capital of CHF 271,315.20, which was­divided into 2,713,152 listed registered shares, each with a par value of CHF 0.10. Of this amount:–– 63.18% were registered in the name of 2,115 shareholders with voting rights–– 31.01% were shares of banks respectively the SIX SIS AG pending registration of transfer–– 5.81% were registered in the share register without voting rights
The shares of Forbo Holding Ltd (security number 000354151/ISIN CH0003541510) are listed on SIX Swiss Exchange. No different categories of shares exist. Each share entitles the owner to one vote. Further information on
the Forbo share can be found on pages 62 and 63. Further information on the rights of participation associatedwith the share can be found on page 78 of this Annual Report.
At the Ordinary General Meeting of Shareholders of Forbo Holding Ltd of April 25, 2008, the Board of Directors
was authorized to buy back the company’s own shares up to a maximum of 10% of the share capital over a ­periodof three years through a second trading line with the purpose of extinguishing them at a later stage. By December 31, 2010, Forbo Holding Ltd had repurchased 213,152 shares (7.856% of the voting rights) via the second
trading line. In other words, the total has not changed since January 1, 2010. At the Ordinary General Meeting of
Forbo Holding Ltd on April 24, 2009, the Board of Directors was then authorized to sell or to use for acquisitions
or for securing convertible or option rights those 213,152 shares repurchased pursuant to the share buyback
program adopted by the Ordinary General Meeting on April 25, 2008 via the second trading line of the SIX Swiss
Exchange. Should these shares not have been sold or used for acquisitions or for securing convertible or option
rights by the date of the Ordinary General Meeting in 2011, the Board of Directors is obliged to propose to theOrdinary General Meeting of 2011 at the latest that these shares be destroyed.

68

Forbo Annual Report 2010 – Corporate governance report

Conditional and authorized capital
Pursuant to paragraph 6 of the Articles of Association, Forbo Holding Ltd has a maximum conditional capital of
CHF 16,645, corresponding to 166,450 registered shares to be paid up in full with a par value of CHF 0.10 each.
The capital increase takes place in accordance with the Articles of Association through the exercise of option andconvertible rights which are granted in connection with bonds issued by the company or one of its subsidiaries
and through the exercise of option rights which are granted to the shareholders. Except for shareholder options,shareholders have no right of subscription. Holders of option or convertible rights are entitled to subscribe to the
new shares. The registration of the new shares is subject to the general restriction set out in paragraph 4 of the
Articles of Association, which stipulates that shareholders are entered in the share register with voting rights only
if they declare expressly that they have acquired the shares in their own name and for their own account.
There is no authorized capital.
Changes in capital
No changes to the capital of Forbo Holding Ltd were made in the year under review.
The Ordinary General Meeting of Forbo Holding Ltd on April 24, 2009 decided, based on the audit report of an
accredited expert auditor, to reduce the ordinary share capital of the company by CHF 10,581,292.80 from
CHF 10,852,608 to CHF 271,315.20 by reducing the par value of the shares from CHF 4 to CHF 0.10. It was further
decided to pay out the difference of CHF 3.90 per share to the shareholders and to amend the Articles of Association accordingly.
The Ordinary General Meeting of Forbo Holding Ltd on April 25, 2008 decided, based on the audit report of an
accredited auditor, to reduce the ordinary share capital of the company by CHF 27,131,520 from CHF 37,984,128
to CHF 10,852,608 by reducing the par value of the shares from CHF 14 to CHF 4. It was further decided to pay out
the difference of CHF 10 per share to the shareholders and to amend the Articles of Association accordingly.
Participation certificates and ‘Genussscheine’ (non-voting equity securities)
Forbo Holding Ltd has neither issued participation certificates nor non-voting equity securities.
Limitations on transferability and nominee registrations
Forbo Holding Ltd does not have any percentage limitations on voting rights. The Board of Directors may only
refuse to register stock in the share register if the purchaser of the stock does not expressly declare at the company’s request that he has acquired the shares in his own name and for his own account.
Pursuant to § 4 of the Articles of Association, nominees may be entered in the share register with voting rights for
up to a maximum of 0.3% of the registered share capital entered in the Commercial Register. Over and above thislimit, nominees are only entered provided the name, address and shareholding of those persons are disclosed
for whose account the nominee holds a total of 0.3% or more of the registered share capital entered in the Commercial Register.
Resolutions on the amendment or abrogation of the clause on the registration of registered shares require amajority of two thirds of the votes represented at the General Meeting and the absolute majority of the par valueof the shares represented.
No statutory privileges exist and there is no restriction on the transferability of the shares of Forbo Holding Ltd.

69

Convertible bonds and warrants/options
Forbo Holding Ltd has no outstanding convertible bonds nor has it issued any marketable warrants/options.
­Information on the option program available to the Executive Board can be found on pages 76 and 77, as well as
on pages 119 and 120 of this Annual Report.

Board of Directors
Members of the Board of Directors
The cutoff date for the following information is December 31, 2010.
With the exception of This E. Schneider, Delegate of the Board of Directors and CEO, none of the members of theBoard of Directors listed below has or has had any operational management tasks for Forbo Holding Ltd or its
Group companies. With the exception of This E. Schneider, none of the members of the Board of Directors sat on
the Executive Board of Forbo Holding Ltd or the management of its Group companies in the three business years
preceding the period under review. There are no essential business relationships between the members of theBoard of Directors and Forbo Holding Ltd or its Group companies.
Dr. Albert Gnägi, Chairman
Albert Gnägi, born in 1944, is a Swiss citizen. He studied law at the Universities of Zurich and Rome and holds a
doctorate in law (Dr. iur.). He practices law in Zurich, specializing in commercial, company and inheritance law. He
was Chairman of the Board of Selecta Group from the IPO in 1997 until the takeover by the British company
Compass Group in early 2001. From 1982 to 1997, he was a member and Chairman of the Board of Directors of
Immuno International AG, a manufacturer of biological pharmaceuticals, which went public in Zurich in 1989.
Albert Gnägi has been a member of the Board of Trustees of the Sanitas Hospital in Kilchberg since 1980 and was
its Chairman until 2010. He has been Chairman of the Board of Directors of SAM Group Holding AG, Zurich, since2007. He holds additional board memberships in other companies and foundations. He has been Chairman of
the Board of Directors of Forbo Holding Ltd since March 2005.
Michael Pieper, Vice Chairman
Michael Pieper, born in 1946, is a Swiss citizen. He took a degree in economics (lic. oec. HSG) at the University of
St. Gallen. Michael Pieper has been with the Franke Group since 1988 and its owner and CEO since 1989. He is amember of the Board of Directors of Hero AG, advalTech Holding AG, Berenberg Bank (Schweiz) AG and Rieter
Holding AG in Winterthur. He was first elected to the Board of Directors of Forbo Holding AG in 2000.
This E. Schneider, Delegate and CEO
For the curriculum vitae of This E. Schneider, please see page 55 of this Annual Report.
Dr. Peter AltorferPeter Altorfer, born in 1953, is a Swiss citizen. He studied law at the University of Zurich and holds a doctorate inlaw (Dr. iur.). He attended the PED program at the IMD, Lausanne. Until 1988, he worked at Bank Leu AG, sub­sequently as attorney at law, and today as partner at the law firm Wenger & Vieli AG in Zurich, specializing in bankand company law. Peter Altorfer is a member of the Board of Directors of various companies, including­Huber + Suhner AG, Herisau, agta record ag, Fehraltorf, Abegg Holding AG, Zurich, Altin AG, Baar, several privateand foreign banks and non-listed investment companies in Switzerland. He has been a member of the Board of
Directors of Forbo Holding Ltd since March 2005.

70

Forbo Annual Report 2010 – Corporate governance report

Vincent Studer
Vincent Studer, born in 1962, is a Swiss citizen. He completed the Advanced School of Economics and Business
Administration in Berne and the formation as a Swiss certified public accountant. In addition, he has attended
various national and international training courses. From 1991 to 2008, Vincent Studer worked at Ernst & Young
AG in Berne as an external auditor and was head auditor auditing the statements of national and international
companies in various industries. In 2001 he was appointed a partner in the area of auditing. Since 2008 he has
been a partner and member of management of the accountancy and auditing firm T & R AG, Gümligen/Berne,
where he heads the auditing business unit. Vincent Studer is a member of the Board of Directors of Bank EEK AG
in Berne and holds additional board memberships in other companies and foundations. He has been a memberof the Board of Directors of Forbo Holding Ltd since April 2009.

Board of Directors of Forbo Holding Ltd
at December 31, 2010
First
electedElecteduntil OGM

AFC

HRC

Chairman
Dr. Albert Gnägi
Non-executive director

2005

2013

M

C

Vice Chairman
Michael Pieper
Non-executive director

2000

2013

–

M

2004

2011

–

–

2005

2011

M

M

2009

2012

C

–

Members
This E. Schneider
Delegate of the Board of Directors and executive director
Dr. Peter Altorfer
Non-executive director
Vincent Studer
Non-executive director
Secretary of the Board
Nicole Häfeli
Non-member
OGM: Ordinary General Meeting
AFC: Audit and Finance Committee
HRC: Committee for Human Resources and Remuneration
C: 		 Chair
M: 		 Member

71Elections and terms of office
The members are elected by the General Meeting for a term of three years. A year is defined as the period­between two Ordinary General Meetings. The first term of office after the first election of a member of the Boardof Directors is designed so that every year about one third of all members have to be elected or re-elected.
­Members may be re-elected several times. At the Ordinary General Meeting on April 23, 2010, Dr. Albert Gnägi
and Michael Pieper were re-elected for a three-year term of office in a single vote. Further details on the terms ofoffice of all members of the Board of Directors are contained in the table on page 70. In accordance with theOrganizational Regulations of Forbo Holding Ltd, members who have reached the age of 70 resign from theBoard of ­Directors at the Ordinary General Meeting of the following year. The average age of the incumbent
members of the Board is around 59 years. In determining the composition of the Board of Directors, importanceis attached to the election of independent individuals with international experience in industrial companies aswell as in the financial and consultancy sectors.
Internal organizational structure
The allocation of tasks within the Board of Directors and the composition of the Board committees are shown in
the table on page 70.
Decisions are as a general rule taken by the full Board of Directors. The Board constitutes two standing committees from its own ranks – the Audit and Finance Committee (AFC) and the Committee for Human Resources andRemuneration (HRC) – to deal with clearly defined subject areas of overriding importance. These two committees
have mainly advisory and control functions. In addition, the HRC is empowered to determine the compensation
paid to members of the Executive Board. The remuneration of the Delegate of the Board of Directors and CEO isdetermined by the full Board of Directors. The members of these two committees are elected by the Board of
Directors on an annual basis and can be dismissed at any time.
As a rule, the Chairman of the Board of the Directors chairs the meetings of the Board and the General Meeting.
He plans and conducts the meetings of the Board and the General Meeting. The meetings of the Board and therelevant items on the agenda are prepared by the Chairman in consultation with the CEO. The Chairman monitors the execution of the measures adopted by the Board and is in regular contact with the CEO for this purpose.
He is the direct superior of the CEO. In addition, the Chairman, in consultation with the CEO, represents the Board
vis-à-vis the public, the authorities and the shareholders.
The Vice Chairman is tasked with deputizing for the Chairman should the latter be prevented for any reason
whatever. In accordance with the Organizational Regulations and actual practice, the Vice Chairman has no further duties.
The Delegate of the Board of Directors is also CEO and as such is responsible for the operational management of
the Group and for the tasks delegated to him by the Board of Directors. The members of the Executive Board­report to him for this function. This body was strengthened in the year under review by the creation of the position of the Chief Operating Officer of the Forbo Group (Group COO), who is tasked with the operational management of the three divisions.
The Chairman, Vice Chairman and Delegate (CEO) are elected by the Board of Directors.
The Board of Directors meets on being convened by the Chairman, as often as business requires but at least fourtimes a year. When the Board is convened, the items on the agenda must be notified at least five working days
before the day of the meeting. This notification period may be shortened in urgent cases. In 2010, the Board of
Directors met five times, the meetings usually lasting a full day.

72

Forbo Annual Report 2010 – Corporate governance report

After mutual consultation, the Chairman and the CEO may invite members of the Executive Board or other senior
employees to attend Board meetings for individual items. Regular use is made of this option. External consultants
participate in the meetings of the Board of Directors, the AFC or the HRC only in exceptional circumstances todeal with particular items. As a rule, however, the meetings are held without external consultants.
Audit and Finance Committee
The Audit and Finance Committee (AFC) advises the Board of Directors in respect of its duties towards the Groupin the areas of financial reporting, the accounting standards and systems used, and decisions with significant­financial implications. The AFC monitors the activities of the internal auditors and the external auditors. Moreover,it establishes the audit program of the internal auditors and proposes to the Board of Directors the choice of theexternal auditors for the attention of the General Meeting. The CEO, CFO, and Head Corporate Center are regularly requested to attend the meetings in an advisory capacity, while the internal and external auditors may­attend on special invitation.
The AFC convenes as often as business requires, but at least twice a year. In the 2010 business year, two meetings
were held, each lasting about half a day. The external auditors were present at selected items on the agenda of
the meeting of the AFC on the annual financial statements, while the Ernst & Young representatives responsiblefor internal auditing attended the discussion on the internal audit reports at both meetings of the AFC.
Committee for Human Resources and Remuneration
The Committee for Human Resources and Remuneration (HRC) advises the Board of Directors in respect of its
human resources duties towards the Group, in particular as regards the Board itself and senior management
personnel. The HRC prepares proposals for the attention of the Board of Directors regarding the selection of themembers of the Board and of the CEO, and it assesses and approves the proposals of the CEO regarding theemployment of the Executive Board members. It prepares recommendations for the Board of Directors regarding
the remuneration of the Board, the Chairman, the Committee members and the CEO. The CEO is regularly­involved in an advisory capacity. Agenda items and matters affecting the function or the person of the CEO are
deliberated in his absence.
The HRC convenes as often as business requires. In the 2010 business year, two meetings were held, each lasting
about half a day.
Areas of responsibility
The Board of Directors bears ultimate responsibility for the management of Forbo Holding Ltd. The main dutiesof the Board are the following non-transferable and inalienable tasks pursuant to the Swiss Code of Obligations
and the Articles of Association:–– ultimate management of the company and issuing the necessary directives–– defining the organization–– organization of accounting, financial controlling, and financial planning–– appointment and dismissal of persons entrusted with management of the company–– preparation of the Annual Report and of the General Meeting and implementation of its resolutions–– notification of the court in the event of over-indebtedness
The Board of Directors bears ultimate responsibility for supervising and monitoring management of the com­pany and is responsible for the corporate strategy. It issues guidelines for business policy and is regularly briefed
on the current state of business.

73

Business to be dealt with by the Board of Directors is regularly submitted in advance to the AFC, HRC, ad hoc
committees or individual members, depending on the subject, for review or an opinion. With the exception of its
non-transferable and inalienable tasks, the Board of Directors may transfer tasks and responsibilities in full or inpart to individual members of the Board or to third parties.
The Board of Directors is empowered to take decisions on all matters which are not reserved or transferred to theGeneral Meeting or another body of Forbo by law, the Articles of Association or regulations.
Management of the company has been delegated entirely to the CEO. Accordingly, the CEO is responsible for theoperational management of the Group.
In carrying out his tasks, the CEO is supported by the members of the Executive Board, who report to him. The
Executive Board comprises the CEO, Group COO, CFO, Head Corporate Center, and the Executive Vice Presidentsof the three divisions. It is responsible for the long-term success and market-driven management of the ForboGroup. This involves preparing the bases for decision-making for the Board of Directors regarding:–– corporate strategy, corporate targets, business policy, medium-term plans and budgets–– corporate organization–– organization of accounting, financial planning and financial controlling–– financing and treasury principles–– human resources and compensation policy
The members of the Executive Board are responsible for their particular area of activity and also bear co-responsibility for safeguarding the interests of the Group and achieving the financial Group result.
Information and control instruments vis-à-vis the Executive Board
The Executive Board meets as often as business requires, normally once a month. In the 2010 business year,
eleven meetings were held, each lasting from half a day to a full day.
At the meetings of the Board of Directors, any member may request information about all matters concerning
the Forbo Group. Outside the meetings, such requests for information are to be addressed to the Chairman. The
CEO and the other members of the Executive Board inform the Board of Directors at each regular meeting about
the current state of business, important business events and significant deviations from the budget.
The Chairmen of the AFC and HRC report at the Board meetings on the activities of their committees and express
the opinions and recommendations of the AFC or HRC on the business items on which decisions are to be taken.
Each member of the Board of Directors has the right to inspect the minutes of the AFC and HRC meetings. The
Executive Board reports to the AFC through the CFO and the Head Corporate Center in consultation with theCEO; it reports to the HRC through the CEO.
The Board of Directors is also regularly briefed outside meetings about events and challenges facing the Groupand the general performance of the divisions. In addition, the Chairman, Vice Chairman, and CEO are in regularcontact when essential business policy issues are involved. For important, particularly urgent events, the CEO
informs the Chairman and the other members of the Board immediately.

74

Forbo Annual Report 2010 – Corporate governance report

The Delegate of the Board, who is at the same time CEO, conducts the meetings of the Executive Board. For­details concerning the participation of members of the Executive Board in meetings of the Board of Directors andits committees, see the sections on internal organization, the AFC and the HRC on pages 71 and 72.
The Board of Directors furthermore fulfils its supervisory and monitoring obligations by means of financial reporting and its role in the planning cycle. The internal and external auditors also assist the Board of Directors in thistask. Neither the external auditors nor the internal auditors, however, were invited to any meetings of the Boardof Directors in 2010 as there were no special incidents or discoveries.
As part of financial reporting, the Board of Directors is informed as a rule once a month in writing about the company’s current business performance and earnings situation by means of annotated income statements, key­ratios, and deviation analyses.
The Board of Directors is, moreover, closely involved in the company’s planning cycle. As a rule, the existing strategy is subjected to a thorough review by the Board of Directors in the first half of the year. The revised strategy isquantified in the three-year medium-term plan, which is approved at mid-year by the Board of Directors. Basedon the medium-term plan, the Board of Directors sets the budget objectives for the coming business year. Thesebudget objectives are the basis for the detailed budget, which is approved and adopted by the Board of Directors
in the fourth quarter.
The current business year is assessed in a first estimate always at the end of April and in a second estimate at theend of September. On completion of the business year, the extent to which the budget has been reached ischecked and deviations are analyzed. This analysis is used to derive appropriate measures, which are then implemented in the next planning cycle.
Internal Auditing is effected by Ernst & Young, which has been commissioned for this purpose. Internal Auditing
is administratively subordinated to the Head Corporate Center and is functionally independent. It reports to theAFC.
The audits are conducted in accordance with an annual plan approved by the AFC. A distinction is made ­between
ordinary and special engagement audits. The latter consist of limited reviews, follow-up reviews, compliance
audits, and other special engagements. The risks and weaknesses identified in these audits are, where necessary,
minimized or eliminated by measures adopted by management and are constantly monitored.
In 2010 a total of eight internal audits and one follow-up review were conducted. The internal audits were limited
to individual business processes. In its review, internal audit included in particular those control points that had
been defined in the internal control system (ICS) for the Group companies being audited. Internal audits also
­involved various compliance reviews related to these processes. Lastly, additional risks and controls in connection
with the above-mentioned business processes were analyzed in the audit. At least one company in each division
was audited in the course of the internal audits.
By means of self-assessments, the implementation and reliability of the controls introduced with the ICS were
examined to ensure that deviations were identified and that appropriate corrective measures were implemented.

75

Risk management
The ongoing and systematic evaluation of current and future risks invariably involves identifying and capitalizingon opportunities. Forbo regards risk management as a managerial and working tool designed to – amongst­others – safeguard the tangible and intangible assets of the Group.
Forbo has a risk-based insurance coverage in line with industry practice and has appropriately insured in particular operational risks such as property damage, business interruption, and statutory liability. The risks specifically inthe areas of property damage, business interruption, and liability are examined in the context of periodic riskengineering audits by external experts. For this purpose, production companies are visited at regular intervals,
and comprehensive surveys are worked through with local management. Action plans are drawn up and implemented based on the risks identified. These risk engineering audits have been prepared since 1990.
As regards business risks, Forbo addresses both strategic risks as well as market and financial risks. In the area ofmarket risks, interest and currency risks are monitored centrally and hedged in certain cases. The liquidity and­financing of subsidiaries are also monitored centrally. Please also refer to pages 132 – 135 of the financial report.
With regard to the risk management process pursuant to Article 663b section 12 of the Swiss Code of Obligations,the reader is referred to the relevant explanations on page 156 (note 18 on ‘Risk assessment’) and on pages
132 – 136 (note 37 on ‘Risk assessment and financial risk management’) of the financial report.

Executive Board
Members of the Executive Board, activities and vested interests
The members of the Executive Board, their nationality, function, training, and professional career, as well as otheractivities and vested interests are set out on pages 55 and 56 of this Annual Report.
Management contracts
Forbo Holding Ltd has concluded no management contracts with third parties.

Compensations, shareholdings and loans
Content and methodology of determining the compensation andthe shareholding programs
Board of Directors
The amount of compensation paid to the Board of Directors is worked out by the HRC in the spring for the current year and submitted to the full Board of Directors at its April meeting for approval. In order to determine theremuneration, the compensation paid to Board members of Forbo Holding Ltd is compared with that paid to
Board members of comparable industrial companies based on information that is available from publicly accessible sources or is known to the Board members from their experience of office in similar companies. Industrial
companies are regarded as comparable which are similar to Forbo in terms of sector, structure, size, and complexity. No external consultants are co-opted for determining the remuneration.

76

Forbo Annual Report 2010 – Corporate governance report

The members of the Board of Directors receive a fixed remuneration, the amount of which is gradated according
to whether the member is Chairman or a simple member of the Board and whether he is a member of the AFC
or HRC. 40% of the consideration is distributed to the Board of Directors as Forbo stock. These shares have a vesting period of three years. The shares are valued by taking the average price in the ten trading days after distribution of a dividend or repayment of par value. If no dividend is distributed or no repayment of par value is made,the average price during the first ten trading days in June of the relevant business year applies. Payment anddistribution of the shares take place in December.
The amount of the remuneration for each Board member in the year under review, along with the details of thevaluation of the shares, can be found on pages 131 and 153 of the financial report.
Executive Board
The amount of the fixed remuneration and the target bonus for the Executive Board is set by the HRC in the fall
for the following year; members of the Executive Board are excluded from the deliberations. In determining thecompensation, criteria such as function, responsibility, and experience are taken into account, and the compensation paid to members of the Forbo Executive Board is compared with that paid to Executive Board members
in comparable industrial companies based on information that is available from publicly accessible sources or is
known to the members of the HRC from their experience of office in similar companies. Industrial companies are
regarded as comparable which are similar to Forbo in terms of sector, structure, size and complexity. No external
consultants are co-opted for determining the remuneration.
The compensation of the members of the Executive Board consists of a fixed base salary plus a performance-­
related bonus, which is determined in March, on completion of the business year, on the basis of individual andcompany target achievement.
The variable component (performance-related bonus) is tied to financial (quantitative) and qualitative targets
which are defined in accordance with the operational responsibility of the Executive Board member in question.
The qualitative targets are geared to the company’s long-term sustainable development and may account for
between 15% and 25% of the total variable component; the remaining portion of the variable component­depends on the achievement of the financial (quantitative) targets. Depending on the function of the Executive
Board member in question, these may be Group and/or divisional objectives and refer in particular to net sales,
EBITDA, EBIT, current assets and net income. The variable component may be as much as 175% of the fixed remuneration, depending on the individual’s target achievement.
Payment of a bonus is linked with the Management Investment Plan (MIP) launched in 2006. At least 50% of theannual bonus of Executive Board members is thus paid into the MIP. 25% of these sums in the MIP are invested in
options and 75% in shares of Forbo Holding Ltd. Shares and options are subject to a three-year vesting period;
the options have a maturity of five years.

77

Of special note with regard to the MIP is the treatment of options in the event of termination of the employment
contract, invalidity or retirement. If notice is given terminating the employment contract during the vesting­period, the options are repurchased; the repurchase price corresponds to 100% of the theoretical average valueof the option based on the share price during the last 14 trading days for the share before the employment contract was terminated. In the event of invalidity or retirement (including early retirement), the options – regardlessof whether or not they are still subject to a vesting period – may be sold during the entire remaining period tomaturity from the moment the invalidity or retirement begins.
As per the balance-sheet date December 31, 2010, the Executive Board held the following options:
Allocation
2006
2007
2008
2009
2010

No.
500
5,250
5,446
7,028
4,460

Term
19.04.2006 – 19.04.2011
15.03.2007 – 15.03.2012
19.03.2008 – 19.03.2013
02.04.2009 – 02.04.2014
15.03.2010 – 16.03.2015

Vested until
20.04.2009
15.03.2010
19.03.2011
03.04.2012
15.03.2013

Subscription ratio
1:1
1:1
1:1
1:1
1:1

Strike price CHF
370.00564.69822.00214.63434.75The amount of the remuneration for the Executive Board in the year under review, along with the details of thevaluation and distribution of the shares and options, can be found on pages 131 and 153 of the financial report.
This compensation consists of the base salary, a performance-related bonus, private use of the company car,employer contributions to the pension funds, AHV/ALV (old-age and unemployment insurance) and accident
and company sick payment insurance.
With the exception of the severance payment for the Delegate of the Board of Directors and CEO mentioned
below, no severance payments have been agreed with Executive Board members.
Delegate of the Board of Directors and CEO
The Delegate of the Board of Directors and CEO has a separate remuneration model which is independent of thatof the Board of Directors and Executive Board; he is also not a participant in the Management Investment Plan
(MIP).
In fall 2005, it was agreed with the Delegate of the Board of Directors and CEO that part of his compensation for2005 and the compensation for the following five years (from 2006 up to and including 2010) would be paid
largely in stock. In lieu of salary payments for the contractual period of employment until December 31, 2010, he
was allocated a number of shares for the entire five-year term of the agreement (i.e. 2006 – 2010). These sharesare time-vested until December 31, 2010 and freely available only as of January 1, 2011. Should he leave thecompany before this date, the shares must be returned on a pro rata basis. Under the terms of this model,
the Delegate of the Board of Directors and CEO is entitled to a severance payment amounting to a maximum of
18 monthly salaries in the event of notice being given for which he was not at fault. This right lapses withoutcompensation on expiry of the vesting period on December 31, 2010.
With effect as of January 2009 the employment contract with the Delegate of the Board of Directors and CEO
was extended to encompass the period from January 1, 2011 to April 30, 2013. The remuneration will again
be mainly in shares. The modalities correspond to the greatest extent with the terms of the first contract. The
29,775 shares are vested until December 31, 2013. No severance payment has been agreed as part of this contract extension.

78

Forbo Annual Report 2010 – Corporate governance report

In addition to the share package, the Delegate of the Board of Directors and CEO draws an annual cash compensation, which is used for settlement of employee contributions to the pension fund and to social security. With
the share package and the cash remuneration, all compensations such as bonuses, inflation, adjustments,­options, etc. are settled.
The relevant figures for this compensation model are found on pages 131 and 153 of the financial report.

Shareholders’ participation
Voting right restriction and representation
The registration of shares with voting rights in the share register requires the consent of the Board of Directors.
Such consent may be withheld if the purchaser does not expressly declare that he has acquired and is holding
the shares in his own name and for his own account. Pursuant to the Articles of Association, nominees may beentered in the share register with voting rights for up to a maximum of 0.3% of the registered share capital­entered in the Commercial Register. The restriction regarding the registration also applies to shares that are­subscribed or acquired through exercise of a subscription, option or convertible right. Resolutions on the amendment or abrogation of the clause on the registration of registered shares require a majority of two thirds of thevotes represented at the General Meeting and the absolute majority of the par value of shares represented.
Deviating from Article 689, paragraph 2, Swiss Code of Obligations, shareholders who are unable to attend theGeneral Meeting in person may not be represented by any third party of their choosing. They may only be represented by a member of a corporate body of the company, the independent proxy or another shareholder who isregistered in the share register.
Statutory quorums
Pursuant to § 13 of the Articles of Association, resolutions on the amendment or abrogation of the provisions
regarding the moving of the company’s domicile, conversion of registered shares into bearer shares, registrationof registered shares, representation of shares at the General Meeting, the dissolution or merger of the company,
and the amendment of § 13 paragraph 4 of the Articles of Association require the approval of two thirds of thevotes represented at the General Meeting and the absolute majority of the par value of the shares represented.
Convening of the General Meeting
The General Meeting is convened in accordance with the statutory provisions.
AgendaShareholders who represent at least 1% of the share capital may request that an item be placed on the agenda.
This request must be communicated to the Board of Directors in writing, indicating the proposals, at least 45 days
before the date of the General Meeting.
Entry in the share register
Pursuant to the Articles of Association, shareholders’ rights of participation and representation at the General
Meeting are determined by the status of the share register on the fourth day before the General Meeting.

79

Changes in control and defense measures
Duty to make an offer
The Articles of Association of Forbo Holding Ltd do not contain an opting-up clause or an opting-out clausepursuant to Article 32 and 22 SESTA. However, as regards the determination of the minimum price, the Articles of
Association deviate from Article 32, paragraph 4 SESTA in that, in the event of a compulsory offer, the offer pricemust at least correspond to the share price and may not be lower than the highest price which the bidder paidin the last twelve months for shares of the company.
Clause in changes of control
As per year-end 2010, one member of the Executive Board is entitled to claim a severance payment due to achange in the controlling shareholder in the event that certain conditions arise. This severance payment corresponds to one annual salary at most.

Auditors
Duration of the mandate and term of office of the head auditor
PricewaterhouseCoopers have been the Forbo Group’s auditors since 1987. The predecessor company of PricewaterhouseCoopers had been Forbo’s auditors since 1928. The auditors are elected every year by the Ordinary
General Meeting on a proposal by the Board of Directors. As the Auditor in Charge has to be changed at least
every seven years, Daniel Ketterer took over the function of Auditor in Charge as of the 2009 business year.
Auditing fees
The auditing fees levied by the Group’s auditors for auditing the consolidated financial statements, including thestatutory audit of the individual financial statements of the holding company and the consolidated subsidiaries,
amounted to CHF 1.1 million in the year under review.
Additional fees
For the year 2010, the auditing company invoiced additional consulting fees of CHF 0.6 million. This relates mainly to tax consultancy.
Informational instruments pertaining to the external audit
The external auditors prepare for the CEO, the CFO, and the Head Corporate Center an annual management letteron their work and the results of their audit at Group level in the year under review. The key points are submitted
to the Board of Directors in the form of a comprehensive report. The external auditors also prepare management
letters on the subsidiaries they have audited. The AFC assesses and evaluates the proposals and statements it hasreceived and appraises the corrective measures taken by management. At the AFC’s invitation, representatives ofthe external auditors attend the AFC meetings in an advisory capacity. The Chairman of the AFC reports on theactivities of the AFC and its assessment of the external auditors at the meetings of the Board of Directors. Any
member of the Board of Directors has access to the minutes of the AFC meetings.

80

Forbo Annual Report 2010 – Corporate governance report

At its meetings, the AFC assesses the performance and fees of the external auditors as well as their independence
in both their auditing and their non-auditing capacities. This evaluation is based on the documents provided by
the external auditors and the discussion held with the external auditors in the meetings. It also relies on theevaluation of the CFO, who obtains the opinion of local management with regard to the audit work for the subsidiaries. The criteria for the evaluation of the external auditors are, in particular, their technical and operational
competency, their independence and objectivity, delivery of the audit reports on time, breadth and focus of theaudits, and the ability to provide effective and practical recommendations. This assessment by the AFC forms thebasis for the proposal made by the Board of Directors to the Ordinary General Meeting regarding the choice ofthe external auditors.

Information policy
Transparency for investors
Forbo provides objective and periodic communication with shareholders, the capital market, the media, and the
public by reporting in timely fashion on business trends and activities relevant for the company. Both the Chairman of the Board of Directors and the CEO can be contacted directly for such information.
Shareholders receive summary reports on the business year as well as half-year reports. The Annual Report, likeall other published documents, is available in printed form as well as on the Internet at www.forbo.com. The
General Meeting is an additional platform for the exchange of information. Periodic publication of media releases,
the annual media and analysts’ conference, as well as roadshows are further information tools for the media,­respectively the capital market.

81

Ad hoc communication
The push and pull links for the dissemination of ad hoc releases in accordance with the directive on ad hoc­publicity of the SIX Swiss Exchange are available at the following addresses:
www.forbo.com � Medien Center � Medienmitteilungen � Subscription Service
www.forbo.com � Media Center � Media Releases � Subscription Service
Communications to registered shareholders are sent by ordinary mail to the addresses stated in the share register.
The company’s official publication is the Swiss Official Gazette of Commerce.
A financial calendar with the key dates can be found on page 10 of this Annual Report. Further information on
the Forbo share is printed on pages 62 and 63 of this Annual Report.
Publications may be ordered by e-mail, fax or telephone.
E-mail communications@forbo.com
Phone + 41 58 787 25 25
Fax + 41 58 787 20 25
The contact address for Investor Relations is:
Forbo International SA
Urs Christen, Head Corporate Development & Investor Relations
Lindenstrasse 8
P.O. Box 1041
CH-6341 Baar
Phone + 41 58 787 25 25
The contact address for press information is:
Forbo International SA
Karin Marti, Head Corporate Communications
Lindenstrasse 8
P.O. Box 1041
CH-6341 Baar
Phone + 41 58 787 25 25

Financial Report

Forbo Group financial reportConsolidated balance sheetConsolidated income statementComprehensive income statement
Consolidated shareholders’ equity
Consolidated cash flow statementNotes – accounting principles
Notes
Group companies
Report of the statutory auditor
Consolidated income statements 2006 – 2010
Consolidated balance sheets 2006 – 2010

83
84
85
86
87
88
89
103
138
142
144
145

Financial statements for Forbo Holding Ltd
Income statement
Balance sheet
Notes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

147
148
149
150
157
158

84

Forbo Annual Report 2010 – Consolidated financial statements

Consolidated balance sheet

Assets
CHF m
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Investments in associates and other non-current assets
Current assets
Inventories
Trade receivables
Other receivables
Prepaid expenses and deferred charges
Marketable securities
Cash and cash equivalents
Total assets
Shareholders’ equity and liabilities
CHF m
Shareholders’ equity
Share capital
Treasury shares
Reserves and retained earnings
Non-current liabilities
Non-current financial debt
Employee benefit obligations
Non-current provisions
Deferred tax liabilities
Current liabilities
Trade payables
Current provisions
Accrued expenses
Current financial debt
Current tax liabilities
Other current liabilities
Total liabilities
Total shareholders’ equity and liabilities

The accompanying notes are an integral part of the consolidated financial statements.

31.12.2010

31.12.2009

743.9
450.2
270.4
17.6
5.7
750.3
260.9
220.8
28.4
21.4
47.4
171.4
1,494.2

885.7
549.9
309.1
20.5
6.2
859.7
261.0
237.1
33.1
30.1
100.2
198.2
1,745.4

729.7
0.3
– 0.1
729.5
360.8
196.5
74.7
35.3
54.3
403.7
135.7
21.9
118.4
65.9
31.0
30.8
764.5
1,494.2

679.6
0.3
– 0.1
679.4
720.2
550.1
68.6
38.8
62.7
345.6
123.3
32.9
125.3
3.4
24.7
36.0
1,065.8
1,745.4

Note

16
17
14
18
19
20

21
22

Note

24

26
27
28
14
29
28
30
31

Forbo Annual Report 2010 – Consolidated financial statements

85

Consolidated income statement

CHF m
Net sales
Cost of goods sold
Gross profit
Development costs
Marketing and distribution costs
Administrative costs
Other operating expenses
Other operating profit
Operating profit
Financial income
Financial expenses
Group profit before taxes
Income taxes
Group profit for the year

Note

CHF
Basic earnings per share
Diluted earnings per share

Note

The accompanying notes are an integral part of the consolidated financial statements.

6

7
8
9
10
12
13
14

15
15

2010

2009

1,789.7– 1,201.1
588.6– 27.3– 250.7– 123.9– 14.0
13.2
185.9
44.4
– 15.5214.8– 51.5163.3

1,782.4– 1,200.4
582.0– 27.9– 270.0– 128.3– 46.4
12.4
121.8
4.3
– 24.7101.4– 25.3
76.1

71.64
71.48

33.67
33.67

86

Forbo Annual Report 2010 – Consolidated financial statements

Comprehensive income statement

CHF mGroup profit for the year
Components of other comprehensive income:Translation differences
Changes in fair value of financial instruments available-for-sale
Proceeds from the sale of financial instruments available-for-sale; transfer to income statement
Actuarial loss on pension liabilities
Fair value adjustments of cash flow hedges
Fair value adjustments of net investment hedges
Other comprehensive income for the year, net of tax
Total comprehensive income

The items reported in ‘Other comprehensive income
for the year, net of tax’ include the income tax effects
that are explained in note 14 ‘Income taxes’.

2010

2009

163.3

76.1

– 119.6
11.7– 14.3– 12.20.2– 4.7– 138.9
24.4

– 8.9
21.2
0.0
– 7.8
6.8
10.1
21.4
97.5

The accompanying notes are an integral part of theconsolidated financial statements.

Forbo Annual Report 2010 – Consolidated financial statements

87

Consolidated shareholders’ equity

2010

CHF m
December 12, 2009
Group profit for the year
Other comprehensive
income for the year, net of tax
Total comprehensive
incomeChange in revaluation reserve
Share-based payments
Treasury shares
Dividend payment
December 31, 2010

Revaluation
reserve

Reserve for
AFS financial
assetsReserves
fromcash flow
hedgesReserves
from net
investment
hedgesTranslationdifferences

136.5

21.2

– 0.2

10.5

– 267.0

0.0

778.4
163.3
– 12.2

– 2.6

0.2

– 4.7

– 119.6

679.6
163.3
– 138.9

0.0

151.1

0.0

– 2.6

0.2

– 4.7

– 119.6

24.4

7.3
5.5
33.7
– 13.5
962.5

– 7.3

129.2

18.6

0.0

5.8

– 386.6

0.0
5.5
33.7
– 13.5
729.7

Reserves

Revaluation
reserve

Reserve for
AFS financial
assetsReserves
fromcash flow
hedgesReserves
from net
investment
hedgesTranslationdifferences

143.3

0.0

– 7.0

0.4

– 258.1

0.0

696.9
76.1
– 7.8

21.2

6.8

10.1

– 8.9

584.4
76.1
21.4

0.0

0.0

68.3

0.0

21.2

6.8

10.1

– 8.9

97.5

6.8
4.5
1.9

– 6.8

– 10.6
0.3

0.0
0.0
1.9
– 0.1

778.4

136.5

– 267.0

0.0
4.5
1.9
– 8.7
679.6

Share
capitalTreasuryshares

0.3

– 0.1

0.0

0.0
0.0
0.3

– 0.1

Reserves

Total

2009

CHF m
December 12, 2008
Group profit for the year
Other comprehensive
income for the year, net of tax
Total comprehensive
incomeChange in revaluation reserve
Share-based payments
Treasury shares
Reduction in par value
December 31, 2009

Share
capitalTreasuryshares

10.9

– 2.0

21.2

The accompanying notes are an integral part of the consolidated financial statements.

– 0.2

10.5

Total

88

Forbo Annual Report 2010 – Consolidated financial statements

Consolidated cash flow statement

2010

2009

Cash flow from operating activities
CHF mGroup profit for the year
Tax expense
Group profit before taxes
Net financial income (–)/expenses
Depreciation and impairment on property, plant and equipment
Amortization and impairment on intangible assets
Profit from disposal of non-current assets
Share-based payments
Income tax paid
Decrease (–)/increase in provisions and employee benefit obligations
Increase (–)/decrease in other operating working capital
Increase (–)/decrease in net operating working capital1)
Net cash flow from operating activities

163.3
51.5
214.8
– 28.9
53.4
5.0
– 4.3
5.5
– 27.7– 6.4– 9.1– 14.3
188.0

76.1
25.3
101.4
20.4
58.9
7.9
– 3.5
4.5
– 33.8
10.4
4.5
42.6
213.3

Cash flow from investing activities
CHF m
Purchase of non-current assets
Proceeds from the disposal of non-current assets
Purchase of available-for-sale financial assets
Sale of available-for-sale financial assets
Net cash flow from investing activities– 37.6
19.3
0.0
92.6
74.3

– 39.8
13.2
– 0.6
3.4
– 23.8Cash flow from financing activities
CHF m
Increase/decrease (–) in current financial debt
Decrease in non-current financial debt
Interest paid
Interest received
Purchase of treasury shares
Proceeds from sale of treasury shares
Dividend payment
Reduction of par value
Net cash flow from financing activities

0.2– 270.5– 14.3
1.0
– 7.6
41.3
– 13.50.0– 263.4– 2.0– 178.2– 22.9
1.3
– 3.8
5.7
0.0
– 8.8
– 208.7

Change in cash and cash equivalents
CHF m
Decrease in cash and cash equivalents
Translation differences on cash and cash equivalents
Total cash and cash equivalents at beginning of year
Total cash and cash equivalents at year-end– 1.1– 25.7198.2
171.4– 19.2
1.8
215.6
198.2

1) The net operating working capital includes the items ‘Trade receivables’, ‘Inventories’, and ‘Trade payables’.

The accompanying notes are an integral part of the consolidated financial statements.

Forbo Annual Report 2010 – Consolidated financial statements

89

Notes – accounting principles

1 General information
Forbo Holding Ltd (the ‘company’) and its subsidiaries(together with the company constituting the ‘Group’)
manufacture floor coverings, adhesives, and drive andconveyor technology. The Group has a global networkof locations with production and distribution plus puresales companies.
The company is a public limited company under Swisslaw, domiciled in Baar, Switzerland. It is listed on the SIX
Swiss Exchange.
These financial statements were approved by the
Board of Directors on March 9, 2011, and released for
publication on March 15, 2011. The Report is subject
to approval by the Ordinary General Meeting on April
29, 2011.
2 Summary of significant accounting policies
The principal accounting policies applied in the prep­
aration of these consolidated financial statements are
set out below. These policies have been consistently
applied to all the years presented, unless otherwise
stated.
Basis of preparation
The consolidated financial statements of Forbo Holding Ltd were prepared in accordance with the Inter­national Financial Reporting Standards (IFRS) and incompliance with Swiss law. They were drawn up on
the basis of the audited financial statements of theGroup companies prepared according to uniform corporate accounting policies. The reporting date for all
Group companies is December 31.

The consolidated statements have been prepared inaccordance with the principle of historical purchaseand production costs with the exception of availablefor-sale financial assets (securities), non-consolidated
investments in associates, land and buildings, and derivative financial instruments, which are measured atfair value. The preparation of the consolidated financial
statements requires management to make estimatesand assumptions that can affect reported revenues,
expenses, assets, liabilities and contingent assets andliabilities at the date of the financial statements. If theestimates and assumptions made by management at
the date of the financial statements to the best of its
knowledge differ from the actual circumstances, theoriginal estimates and assumptions will be adjusted in
the reporting year in which the circumstances havechanged. The comparable data from the consolidated
financial statements of the previous year were, where
necessary, restated and supplemented and the presentation adjusted.
Scope and principles of consolidation
The subsidiaries of Forbo Holding Ltd are all domestic
and foreign companies in which the company holds,
directly or indirectly, more than 50 percent of voting
rights or in which it bears managerial responsibility for
operations and financial policies. Subsidiaries are fully
consolidated from the date on which control is transferred to the Group. They are deconsolidated from thedate that control ceases.

90

Forbo Annual Report 2010 – Consolidated financial statements

The purchase method of accounting is used to account for the acquisition of subsidiaries. The value ofthe transferred consideration in a business combination is recognized at the fair value on the acquisition
date. The consideration includes cash payments andthe fair value of the assets tranferred, liabilities incurredor assumed, and equity instruments issued by the acquirer on the transaction date. Liabilities dependent
on future events which are based on agreements on
contingent considerations are accounted for at theirfair value in the accounting treatment of the acquisition. Directly distributable acquisition costs are reported in the income statement in the period in which
they are incurred. At the acquisition date, the acquirer
recognizes the acquired identifiable assets, liabilities,
and any non-controlling interest in the acquiree. The
acquired identifiable assets and liabilities assumed arerecognized at their fair value. Provided the acquirer
does not acquire a 100% share in the acquiree, thenon-controlling interest is recognized as the proportionate share of the fair value of the net assets acquired. Goodwill is the excess of the cost of the business combination over the acquirer’s interest in the fairvalue of the acquired net assets. If the accounting fora business combination can be determined only provisionally by the end of the period in which the combination is effected, provisional values are used. During
the measurement period, the provisional values areadjusted retroactively. Further assets and liabilities canbe recognized in order to include new information
about facts and circumstances at the acquisition date
which would have influenced the measurement of
the amounts recognized had they been known at
the time. The measurement period does not last morethan twelve months from the date of acquisition.
Goodwill is not written off but is tested for impairment
after each reporting date.

Inter-company transactions, balances, and unrealized
gains or losses on transactions between Group companies are eliminated. Accounting policies of subsidiaries have been changed, where necessary, to ensure
Group-wide consistency.
Associates are all entities over which the Group has­significant influence but not control, generally accompanied by a shareholding of between 20 percent and50 percent of the voting rights. Investments in associates are accounted for using the equity method of­accounting and are initially recognized at cost. The
Group’s investments in associates include goodwill
identified on acquisition, net of any accumulated impairment loss.
The Group’s share of its associates’ post-acquisition
profits or losses is recognized in the income statement,
and its share of post-acquisition movements in reserves is recognized in reserves. The cumulative postacquisition movements are offset against the carrying
amount of the investment. When the Group’s share oflosses in an associate equals or exceeds its interest in
the associate, the Group does not recognize further
losses, unless it has incurred obligations or made payments on behalf of the associate.
The subsidiaries included in the group of consolidated
companies are listed under ‘Group companies’ (frompage 138 of this report).

Forbo Annual Report 2010 – Consolidated financial statements

Foreign currency translation
The individual companies generally prepare their­financial statements in the local currency. The local
currency (functional currency) as a rule corresponds tothe currency of the primary economic environment inwhich the company operates. Foreign currency transactions are translated into the functional currency­using the exchange rates prevailing at the dates of­transactions or the dates of valuation where items are
remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and fromthe translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except when deferred in other comprehensive income
as qualifying cash flow hedges or qualifying net investment hedges. Translation differences on non-monetary financial assets and liabilities whose changes infair value are recognized in income are reported in theincome statement. However, translation differenceson non-monetary financial assets whose changes infair value are recognized in the other comprehensive
income statement are taken to reserves.

91

The consolidated financial statements are preparedin Swiss francs. Unless otherwise noted, all sums are­stated in millions of Swiss francs (CHF m) and are generally rounded to one decimal place. The annual statements of foreign Group companies stated in foreign
currencies are translated into Swiss francs as follows:
assets and liabilities at year-end exchange rates; theincome statement and cash flow statement at averageexchange rates for the year. Currency translation differences arising from the different translation of balance
sheets and income statements and from equity capitaltransactions are offset against consolidated shareholders’ equity and taken to the income statement in theevent the company is divested.
On consolidation, exchange differences arising fromthe translation of net investment in independent foreign operations, of borrowings and of other currency
instruments designated as hedges of such investments are recognized in other comprehensive income.
When a foreign operation is disposed of, exchange differences that were recorded in the other comprehensive income are transferred to the income statement
as part of the gain or loss on sale.
The following exchange rates have been applied forthe most important currencies concerned:
Income statement (averageexchange rates for the year)

Currency
CHF
Euro zone
USA
Great Britain
Japan
China
Sweden

EUR
USD
GBP
JPY
CNY
SEK

1
1
1
100
100
100

Balance sheet(year-end exchange rates)

2010

2009

2010

2009

1.38
1.04
1.61
1.19
15.40
14.47

1.51
1.09
1.70
1.16
15.88
14.20

1.25
0.94
1.46
1.15
14.20
13.99

1.49
1.03
1.66
1.12
15.11
14.46

92

Forbo Annual Report 2010 – Consolidated financial statements

Maturities
Assets are designated current assets if they are realized
or consumed in the Group’s ordinary business cycle
within one year or are held for trading purposes. Allother assets are assigned to non-current assets.
All obligations which the Group intends to settle within the ordinary business cycle using operating cash
flows or which are due within one year of the reporting
date are assigned to current liabilities. All other obligations are assigned to non-current liabilities.
Segment information
Segment reporting discloses financial and descriptive
information on the reportable segments. The reportable segments are operating segments and combinations of operating segments that meet specific criteria.
Operating segments are components of a company
for which separate financial information is available
that is regularly examined by the chief operating decision-maker concerned in order to determine how resources are to be allocated and performance assessed.
Generally speaking, financial information must be reported on the basis of internal controlling throughwhich the performance of the operating segments is
assessed and decisions are taken on how to allocate
the resources to the operating segments.
The reportable segments apply the same accounting
principles as the Group. The provision of services
among the reportable segments is calculated on thebasis of market data, and the prices applied are therefore comparable to those that would have applied in atransaction with a third party.
Segment reporting is prepared to include operating
profit (EBIT). Allocation of interest and taxes to the­individual divisions and Corporate is not appropriate
owing to the highly centralized finances and taxes
functions.

Net sales and revenue recognition
Sales revenue includes the fair value of the consideration received or to be received for the sale of goods
and services as part of ordinary business activity. Sales
revenue is reported net of sales tax, returns, discounts
and rebates, as well as after elimination of intra-Groupsales.
The Group recognizes sales revenue when the amountof the revenue can be reliably determined and when
it is sufficiently likely that the company will derive an
economic benefit. The amount of the revenue canonly be reliably determined once all contingencies
concerning the sale have been settled. The Groupmakes estimates on the basis of historical data, taking
into account ­features specific to the customers, transactions, and agreements. Appropriate provisions are
made for expected warranty claims.
Research and development
All research costs are posted directly to the income
statement in the period in which they are incurred.
­Development costs must be capitalized if all the recognition criteria have been met, the research phase canbe clearly distinguished from the development phaseand costs can be clearly allocated to individual project
phases without any overlap. Development expenses
that do not meet these criteria are taken to the income
statement.
Share-based payments
Equity-settled share-based payments to employees
are valued at the fair value of the equity instrumenton the date on which the payment is granted. The fairvalue of share options is determined by the BlackScholes model. The anticipated maturity used in themodel is adjusted on the basis of best estimates withregard to the effects of non-transferability, restrictions
on exercise, and conduct. Further information on­determining the fair value of the share options is provided in note 25 ‘Stock option plan’. The fair value­determined on granting equity-settled share-based
payments is posted to the income statement over thevesting period and is included in personnel expenses.

Forbo Annual Report 2010 – Consolidated financial statements

Income taxes
Income taxes constitute the total of current and deferred income taxes.
Current income taxes are determined on the basis oftaxable profits and the applicable tax laws of the individual countries. They are recognized as an expense in
the accounting period in which the profits are made.
The profit on which taxes are to be paid differs fromthe profit or loss for the year in the income statement
since it excludes expenses and revenues that will only
be taxable or tax-deductible in subsequent years if at
all. The Group’s liability for current income taxes is calculated on the basis of the applicable tax rates.
Deferred tax liabilities are recognized for temporary
differences between assets and liabilities in the balance sheet and the amounts as measured for tax purposes if they will result in taxable income in future.
Deferred tax assets are reported for temporary differences that will result in deductible amounts in future
periods and for tax effects from fiscally offsettable losses, but only insofar as it is likely that sufficient taxable
profits will be available against which these differences
can be offset. Deferred taxes are not reported if
the temporary differences arise from the recognitionof goodwill or from the initial recognition of other assets or liabilities which relate to events not affecting
taxable income or the profit for the year.
Deferred tax assets and tax liabilities are measured at
the tax rates that are expected to apply in the period inwhich the asset will be realized or the liability will besettled based on enacted rates. Current and deferred
tax assets and liabilities are offset when they arise fromthe same tax reporting group, relate to the same tax
authority, the legal right to offset exists, and they areintended to be settled net or realized simultaneously.
The carrying amount of the deferred tax assets is assessed each year on the reporting date and reduced if
it is no longer likely that sufficient taxable profits will
be available to realize the asset either wholly or in part.

93

Current and deferred income taxes are recognized as
an income tax benefit or expense in the income statement, with the exception of items posted directly toequity. In this case, the corresponding tax effect is also
to be recognized directly in equity.
Deferred income tax is recognized on temporary differences arising on investments in subsidiaries and­associates, except where the timing of the reversal of
the temporary difference is controlled by the Groupand it is probable that the temporary difference will
not reverse in the foreseeable future.
Property, plant, and equipment
Land and buildings are carried on the balance sheet attheir revaluation amount, which corresponds to thefair value at the date of revaluation less accumulated
depreciation and impairment losses. The revaluations
are conducted regularly, at least every five years, by independent external valuers to ensure that the carrying
amount does not differ materially from the carrying
amounts determined on the basis of the fair value on
the reporting date. All accumulated depreciation is­offset against the gross carrying amounts of the assets
on the revaluation date. The net amount is adjusted
to the revalued amount. All other property, plant andequipment is reported at cost less accumulated depreciations and recognized impairments.
Subsequent costs, for instance for expansion or replacement investments, are recognized as part of theasset’s costs or as a separate asset only when it is probable that future economic benefits will accrue to theGroup as a result and when the cost of the item can bemeasured reliably. Expenses for repairs and maintenance which do not constitute a significant replacement investment are posted to the income statement
as expenses in the year in which they are incurred.

94

Forbo Annual Report 2010 – Consolidated financial statements

Increases in the carrying amount arising on revaluationof land and buildings are credited to the revaluation
reserve in shareholders’ equity. This does not apply if
the revaluation reserve for the same assets has been
reduced with an effect on income. In such a case, theincrease is recognized as income in the amount of
the previous decrease. Decreases that offset previous
increases in the same asset are charged against the­revaluation reserves directly in shareholders’ equity. All
further decreases are posted to the income statement.
Land is not depreciated. Depreciation of other assets is
calculated on the basis of their cost or their revalued
amounts (with the exception of assets under construction) using the straight-line method over their estimated useful lives. The estimated useful life is usually 33
years for buildings used in operations and 5 to 10 years
for plant and equipment. Other operating facilities are
depreciated over three to ten years. Where components of larger systems have different useful lives, they
are depreciated as separate items. Useful lives and residual values are reviewed annually at the reporting
date, and any necessary changes are taken into account prospectively.
If the carrying amount of an asset is greater than its
estimated recoverable amount, it is written down immediately to the recoverable amount (see note 16‘Property, plant, and equipment’).
Assets that are held in finance lease arrangements are
depreciated over their estimated useful life in the same
way as assets belonging to the company or, if this is
shorter, over the life of the underlying lease agreement.
The profit or loss arising from the sale of property, plantor equipment is defined as the difference between thesale proceeds and the carrying amount of the asset
and is recognized in income.

Intangible assets
Goodwill is the excess of the cost of the business combination over the acquirer’s interest in the fair value ofthe acquired net assets. Goodwill created on the acquisition of subsidiaries is included in ‘Intangible assets’.
Goodwill is tested annually for impairment and carriedat cost less accumulated impairment losses. Impairment losses on goodwill may not be reversed. Gains
and losses on the disposal of an entity include the­carrying amount of goodwill relating to the entity thatis sold off.
For the purpose of impairment testing, goodwill is­allocated to cash-generating units. The allocation ismade to those cash-generating units or groups ofcash-generating units that are expected to benefit
from the business combination in which the goodwill
arose.
Trademarks, licenses, customer relationships, and technologies acquired in a business combination are recognized at fair value at the acquisition date. Trademarks carried in the balance sheet with an indefinite
useful life are not subject to amortization but are tested for impairment at least annually. Any impairment isrecognized as an expense in the income statement.
Certain trademarks, licenses, customer relationships,
and technologies have a finite useful life and are carried at cost less accumulated amortization. Amortization is calculated using the straight-line method: trademarks 20 years, customer relations between 5 and 25
years, and technologies 30 years.
Acquired computer software licenses are capitalizedon the basis of the costs incurred to acquire and bringto use the specific software. These costs are amortizedover an estimated useful life of three years.

Forbo Annual Report 2010 – Consolidated financial statements

95

Development costs that can be directly attributed tothe design and testing of individual software products
controlled by the Group generally do not meet the criteria for intangible assets on the balance sheet. These
costs are recognized as an expense in the period inwhich they are incurred. Development costs previously recognized as an expense are not capitalized in a
subsequent period.

(a) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss arefinancial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are alsoclassified in this category unless they are designated ashedges. Assets in this category are classified as ‘Other
receivables’.

Impairment of non-financial assets
Assets that have an indefinite useful life, for example
goodwill and certain trademarks, are not subject toscheduled amortization. They are tested for impairment annually. Assets that are subject to amortization
are reviewed for impairment whenever events orchanges in circumstances indicate that the carrying
amount may no longer be recoverable. An impairment
loss is recognized for the amount by which the asset’s
carrying amount exceeds its recoverable amount. The
recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposesof assessing impairment, assets are grouped at thelowest levels for which there are separately identifiable
cash flows (cash-generating units). Non-financial assets other than goodwill that have suffered an impairment in the past are reviewed for possible reversal of
the impairment at each reporting date.

(b) Loans and receivables
Loans and receivables are non-derivative financial­assets with fixed or determinable payments that are
not quoted in an active market. They are included incurrent assets except for maturities greater than twelve
months after the end of the reporting period, in whichcase they are classified as non-current assets. The
Group’s loans and receivables are reported in the balance sheet under ‘Trade receivables’, ‘Other receivables’
and ‘Cash and cash equivalents’.

Financial assets
Classification
Financial assets are classified in the following categories: financial assets at fair value through profit or loss,
loans and receivables, and financial assets availablefor-sale. The classification depends on the purpose forwhich the financial assets were acquired. Management
determines the classification of its financial assets at
initial recognition.

(c) Financial assets available-for-sale
Available-for-sale financial assets are non-derivative­financial assets that are either designated in this category or not classified in any of the other categories. The
Group’s available-for-sale financial claims and otherclaims are reported under ‘Marketable securities’ in thebalance sheet.

96

Forbo Annual Report 2010 – Consolidated financial statements

Recognition and measurement
Purchases and sales of financial assets are always recognized as soon as Forbo becomes a contractual party.
In the case of regular purchases or sales (purchases orsales under a contract whose terms require delivery of
the asset within the time frame generally establishedby regulation or convention in the market concerned),the settlement date is relevant for the initial recognition and derecognition. This is the day on which theasset is delivered to or by Forbo. Financial assets notclassed as being at fair value through profit or loss are
initially recognized at fair value plus transaction costs.
Financial assets which are carried at fair value throughprofit or loss are initially recognized at fair value, andtransaction costs are expensed in the income statement. Financial assets are derecognized when therights to receive cash flows from the investments have
expired or have been transferred and the Group has
transferred substantially all risks and rewards of ownership.
Available-for-sale financial assets and assets in the category ‘Financial assets at fair value through profit orloss’ are carried at fair value after their initial recognition. Loans and receivables are carried at amortizedcost using the effective interest method.
Gains or losses arising from financial assets in the category ‘Financial assets at fair value through profit orloss’ are presented in the income statement in the period in which they are incurred. Dividend income fromfinancial assets classified as at fair value through profit
or loss is recognized in the income statement when
the Group’s right to receive payments is established.

Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognized in the comprehensive income statement withno effect on income. When securities classified as available-for-sale are sold or impaired, the accumulated fairvalue adjustments previously recognized in the comprehensive income statement are included in the income statement. Dividends on available-for-sale equity instruments are recognized in the income statement
when the Group’s right to receive payments is established. The fair value of listed shares is determined by
the current stock market price.
The Group assesses at the end of each reporting period whether there is objective evidence that a financial
asset or a group of financial assets is impaired. In thecase of equity investments classified as available-forsale financial assets, a significant or prolonged decline
in the fair value of the equity investments below theircost is also regarded as evidence that the equity investments are impaired. If any such evidence exists foravailable-for-sale financial assets, the cumulative loss
– measured as the difference between the acquisition
cost and the current fair value, less any impairment loss
on that financial asset previously recognized in profit
or loss – is removed from equity and recognized in theseparate consolidated income statement. Impairment
losses on equity instruments recognized in the income
statement are not reversed through profit or loss. Impairment testing of trade receivables is described innote 20 ‘Trade receivables’.
Derivative financial instruments andhedging activities
The Group uses derivative financial instruments solely
to manage financial risks and not for the purpose of
speculation.

Forbo Annual Report 2010 – Consolidated financial statements

Derivatives are initially recognized at their fair value on
the date a derivative contract is entered into. This may
be positive or negative. Subsequent measurement isalso effected at the fair value applicable on the reporting date. The method of recognizing the resulting gainor loss depends on whether the derivative was designated as a hedging instrument and, if so, the nature of
the item being hedged. The Group designates certain
derivatives as either:–– hedges of the exposure to changes in fair value of arecognized asset or liability or an unrecognized firm
commitment (fair value hedge);–– hedges of the exposure to variability in cash flowsthat is attributable to a particular risk associated witha recognized asset or liability or a highly probable
forecast transaction (cash flow hedge); or–– hedges of a net investment in a foreign operation(net investment hedge).
The Group documents at the conclusion of the transaction the relationship between the hedging instruments and the hedged items, as well as its risk management objectives and the underlying strategy for
effecting various hedging transactions. The Group also
documents its assessment, both at hedge inception
and on an ongoing basis, of whether the derivatives
that are used in hedging transactions are highly effective in offsetting changes in fair values or in cash flowsof hedged items.
The fair values of the various derivative instruments
used for hedging purposes are disclosed in note 34­‘Additional information on financial instruments’. Movements in the hedging reserve for cash flow hedges arereported in the statement of comprehensive income.
The full fair value of a derivative used for hedging isclassified as a non-current asset or liability when theresidual maturity of the hedged item is more thantwelve months after the reporting date, and as a current asset or liability when the residual maturity of thehedged item is less than twelve months. Trading derivatives are classified as current assets or liabilities.

97(a) Fair value hedge
Changes in the fair value of derivatives that are des­ignated as and qualify as fair value hedges of a rec­ognized asset or a commitment are recorded in theincome statement, together with any changes in thefair value of the hedged asset or liability that are attributable to the hedged risk. The Group only uses fairvalue hedges to hedge the fixed interest risk on borrowings and to hedge currency risks in connection
with short-term or medium-term loans. The gain orloss relating to the effective portion of the hedging instrument is recognized in the income statement under‘Financial result’. The gain or loss relating to the ineffective portion is recognized in the income statement
under ’Financial result’. Changes in the fair value of thehedged underlyings, which are attributable to interest
rate risk or currency risk, are recognized in the income
statement under ‘Financial income/Financial expenses’.
If the hedge no longer meets the criteria for hedge­accounting, and the previously designated underlying
transaction is measured using the effective interest
method, the required adjustment of the carrying
amount is implemented over the remaining term tomaturity.
(b) Cash flow hedge
The effective portion of changes in the fair value of­derivatives that are designated and qualify as cash
flow hedges is recognized in the comprehensive income. The ineffective portion of such changes in fairvalue, however, is recognized directly in the income
statement.

98

Forbo Annual Report 2010 – Consolidated financial statements

Amounts deferred in equity are reclassified to profit orloss and are recognized as income or expense in the
period in which the hedged item affects profit or loss
(for example, when the forecast sale that has been
hedged takes place). The gain or loss from the effective
portion of interest rate swaps that hedge variable rateborrowings is recognized in the income statement.
The gain or loss from the ineffective portion is also recognized in the income statement. However, when theforecast transaction that is hedged results in the recognition of a non-financial asset (for example, inventories
or property, plant and equipment) or a non-financial
liability, the gains or losses previously deferred in equity are included in the initial measurement of the costof the asset or liability. The deferred amounts are ultimately recognized in cost of goods sold in the case of
inventories or in depreciation in the case of property,
plant and equipment.
When a hedging instrument expires, or is sold, or ceases to meet the criteria for hedge accounting, any cumulative gain or loss existing in the comprehensive
income at that time remains in equity and is recognized in the income statement only when the originally hedged forecast transaction actually occurs. If a
forecast transaction is no longer expected to occur, thecumulative gain or loss that was reported in equity isimmediately transferred to the income statement.
(c) Net investment hedge
Hedges of net investments in foreign operations areaccounted for similarly to cash flow hedges. Any gainor loss on the effective portion of the hedging instrument is recognized in equity; the gain or loss relating
to the ineffective portion is recognized directly in theincome statement. Gains or losses accumulated in­equity are transferred to the income statement when
the foreign operation is sold off in full or in part. The
last portion of the US private placement is being used
to hedge net investments in the USA.
(d) Derivatives measured at fair value
through profit or loss
Certain derivative financial instruments are not suitable for hedge accounting. Changes in the fair value ofsuch derivatives are recognized directly in the income
statement.

The Group employed hedge accounting in the prioryear in connection with the hedging of periodic in­terest payments and the repayment of the nominal
amount of the US private placement. Some of the­derivatives employed were recognized as cash flow
hedges in order to hedge the future cash flows fromthe US private placement against fluctuations. The effective portion of the change in fair value of the hedging instrument was recognized in the comprehensive
income, with no effect on the income statement, until
the gain or loss on the hedged item is realized; the ineffective portion of the change in fair value of thehedging instrument was recognized in the income
statement. Cumulative changes in fair value recorded
under equity are transferred to the income statement
when the future firm commitments are recognized in
the income statement.
Inventories
Inventories are stated at the lower of cost or net real­izable value. Cost includes direct material and, if applicable, other direct costs and related production overheads to the extent that they are incurred in bringing
the inventories to their present location and condition.
The net realizable value constitutes the estimated sales
price less all estimated costs up to completion, as wellas the costs of marketing, sales and distribution.
Inventories are for the greater part measured at average cost. Adjustments are made for unsalable inventories and inventories with low turnover.
Trade receivables
Current trade receivables are stated at amortized cost,which generally corresponds to the nominal value. Allowances for risks are established based on the maturity structure and discernible solvency risks. In addition
to individual allowances for specific known risks, allowances are also made on the basis of statistically determined default risks.
Marketable securities
Marketable securities are mainly available-for-sale­financial assets. Initial recognition and subsequent
measurement are described separately under ‘Financial assets’ on page 95 onwards of this report.

Forbo Annual Report 2010 – Consolidated financial statements

Cash and cash equivalents
Cash and cash equivalents are stated at nominal value.
They include cash on hand, postal and bank accounts,and fixed-term deposits with an original maturity of up
to 90 days.
Shareholders’ equity
Shares are classified as share capital at their par value.
Payments by shareholders over and above the par value are credited to reserves.
Treasury shares are deducted at their par value fromshare capital. The acquisition costs in excess of par­value arising on the acquisition of treasury shares aredebited to reserves. Gains or losses above the par value
from the sale of treasury shares are credited or debitedto reserves.
Dividends are debited to equity in the period in which
the resolution on their distribution is adopted.
Current and non-current financial debt
Current and non-current financial debt consists mainlyof private placements, bonds, bank loans and leasing
debt. It is stated at amortized cost (less transaction
costs). Borrowing costs are recognized in the income
statement, using the effective interest method.
Financial debt is assigned to current debt, unless theGroup has to settle the obligation 12 months after thebalance sheet date at the earliest or the Group enjoys
an unlimited right to postpone payment of the debt
by at least 12 months after the reporting date.
Employee pension plans
The Group maintains various pension plans designed
as defined contribution and defined benefit plans.
These pension plans are established in accordancewith the local conditions in each country. The plans are
funded either by contributions to legally autonomous
pension funds/insurance plans or by recognition of
the pension plan liabilities in the financial statementsof the respective companies.
For defined contribution plans, the costs incurred in
the relevant period correspond to the agreed employer contributions.

99

For defined benefit plans, the pension liabilities are­calculated annually by independent actuaries according to the projected unit credit method. The liabilities
correspond to the present value of the expected future cash flows. The plan assets are stated at fair value.
Current service costs incurred in the relevant period,
less employee contributions, are stated as personnel
expenses in the income statement. Past service costs
resulting from changes in pension plans are recognized in the income statement on a straight-line basis
over the remaining average period until an active employee acquires a vested pension right, or are immediately posted to the income statement if the employee
has already retired. Profits resulting from pension plan
reductions or compensations are immediately taken to
the income statement.
Actuarial gains and losses are reported in the statement of comprehensive income under ‘Other com­prehensive income for the year, net of tax’, with due
account being taken of deferred taxes.
Provisions
Provisions are recognized if the Group has a current
legal or constructive obligation as a result of a past
event, it is probable that an outflow of resources will
be required to settle the obligation and a reliable estimate of the amount can be made. No provisions are
made for future operating losses. The provision is thebest estimate on the reporting date of the amount­required to meet the current obligation, taking into
­account the risks and uncertainties underlying the­obligation.
A provision for restructuring expenses is reported if
the Group has defined a detailed, formal restructuring
plan which has created a justified expectation among
those affected that the restructuring will be carried out
as a result of the plan’s implementation being initiatedor essential parts being announced. Measurement ofa restructuring provision only takes account of direct
expenses for the restructuring. Only those expenses
are included, therefore, that are caused by the restructuring and are not related to the company’s businessactivities.

100 Forbo Annual Report 2010 – Consolidated financial statements

Trade payables
Trade payables are non-interest-bearing and are disclosed at nominal value.
3 Changes in accounting principles
The following new and revised standards and inter­
pretations of the International Accounting Standards
Board (IASB) and International Financial Reporting­Interpretations Committee (IFRIC) of the IASB with asignificant impact on the financial statements cameinto force during the year under review:
IFRS 3 (revised) Business Combinations – effective July 1,
2009, and derived supplements to IAS 27 Consolidated
and Separate Financial Statements, IAS 28 ­Investments
in Associates and IAS 31 Interests in Joint Ventures
The revised standard still stipulates that business­combinations are to be accounted for using the purchase method, but with some significant changes. For
example, all payments for the price of the acquiree arerecognized at the acquisition-date fair value. For considerations carried as debt, changes resulting fromevents after the acquisition date are recognized in
the income statement. An accounting policy choiceis ­allowed on a transaction-by-transaction basis. The
non-controlling (minority) interest may be measured
either at fair value or as the proportionate share of theacquiree’s net assets. All acquisition-related costs arerecognized as expenses. The Group began applying
IFRS 3 (revised) to all business combinations prospectively as of January 1, 2010.
The following new and revised standards and interpretations came into effect as of July 1, 2009, or January 1,
2010. These standards and interpretations have been
applied provided they are relevant for the Group’s business activities. The application of these standards,
however, has no significant effect on the Group’s disclosures, equity, profits or cash flows.

–– IFRS 2 (revised), Share-based Payments.
–– IFRIC 17 (new) Distributions of Non-Cash Assets to
Owners.
–– IFRIC 18 (new) – Transfers of Assets from a Customer.
–– ‘Improvements to IFRSs‘, published in May 2008.
The IASB published a collection of amendments tovarious IFRSs. All the amendments published wereapplied by the Group as of December 31, 2009, withthe following exception: IFRS 5 Non-current Assets
Held for Sale and Discontinued Operations. For the
purposes of clarification: all assets and liabilities of a
subsidiary are to be classified as held for sale if thesubsidiary is classified as being held for sale. This istrue even if the company retains part of the divested
subsidiary without a controlling interest in it. The
amendment was applied prospectively and had no
impact on the assets, finances or revenues of theGroup.
–– Improvements to IFRSs, published in April 2009.
The IASB published its second collection of amendments to various IFRSs, with the primary aim of eliminating inconsistencies and clarifying formulations.
The collection prescribes transitional provisions foreach amended IFRS.
4 Management assumptions and estimates
The application of the measurement and accounting
principles requires that circumstances and estimates
be assessed and assumptions be made with respect tothe carrying amounts of assets and liabilities. The estimates and the underlying assumptions are based on
past experience and other factors regarded as relevant,including expectations of future events that appear
reasonable in the given circumstances. The actual results may, of course, deviate from the estimates andassumptions of management.
The following are the main areas in which a significant
risk exists in the coming business year involving a significant adjustment of the carrying value of assets andliabilities.

Forbo Annual Report 2010 – Consolidated financial statements 101

Impairment of non-financial assets
Along with the regular periodic review of goodwill
and intangible assets with an infinite useful life, thecarrying amounts of fixed and intangible assets with auseful finite life are also always reviewed if theseamounts can no longer be realized due to changed
circumstances or events. If such a situation occurs, therecoverable amount is determined based on expected
future revenues. This corresponds to either the discounted expected values in use or the expected net
sales price. If these are less than the current carrying
amount, the value is impaired to the recalculated figure. This impairment is recognized as an expense in theincome statement.
If the asset itself does not generate any independent
cash flow, the impairment test must be performed fora cash-generating unit. As a rule, the Group defines the
cash-generating units on the basis of geographicallycohesive markets, the technologies used or the sales
generated by the brands concerned. Important assumptions in these calculations include growth rates,
margins, estimates and management’s experience ofthe future development of net working capital, anddiscount rates. The actual cash flows may deviate significantly from the planned discounted future values.
Likewise, the useful lives may be shortened or investment assets impaired in the event of a change inthe use of buildings, machinery and facilities, changeor abandonment of locations or lower-than-expected
revenues over the medium term. Further informationon this topic can be found in notes 16 ‘Property, plantand equipment’ and 17 ‘Intangible assets’.

Employee pension schemes
Various employee pension plans and schemes exist for
employees at the Group. In order to measure liabilities
and costs, it is first of all necessary to determine whether a plan is a defined contribution or a defined benefit
plan from an economic perspective. In the case of defined benefit plans, actuarial assumptions are made toestimate future developments. These include assumptions and estimates relating to the discount rate, theexpected return on plan assets in individual countries
and future wage trends. In their actuarial calculations
for determining employee benefit obligations, the actuaries also use statistical information such as mortality
tables and staff turnover rates. If these parameterschange owing to a change in the economic situationor market conditions, the subsequent results may deviate considerably from the actuarial reports and calculations. These deviations may have a significant medium-term effect on expenses and revenues from theemployee pension schemes and the comprehensive
income. Further information on this topic can be foundin note 27 ‘Employee benefit obligations’.
Provisions
In the conduct of ordinary business activities, a liabilityof uncertain timing and/or amount may arise. Pro­
visions are determined using available information
based on reasonably expected cash outflows. Depending on the outcome, claims against the Group
may arise that may not be covered, or are covered
only in part, by provisions or insurance benefits. Further information on this topic can be found in note 28‘Provisions’.

102 Forbo Annual Report 2010 – Consolidated financial statements

Income taxes
The Group is obliged to pay income taxes in various
countries. Certain key assumptions are necessary in­order to determine income tax worldwide. There arebusiness events which have an impact on taxation andthe taxable profit. Hence, the amount of the final tax­
ation cannot be determined definitively. The measurement of current tax liabilities is subject to the interpretation of tax regulations in the relevant countries. The
adequacy of this interpretation is assessed by the tax
authorities in the course of the final assessment or tax
audits. This may result in material changes to tax expense. Where the definitive taxation of these businessevents deviates from the previous assumptions, thiswill have an impact on the actual and deferred taxes in
the period in which the taxation is definitively determined. Furthermore, determining whether tax losses
carried forward can be capitalized requires a critical estimate of the probability that they can be offset against
future profits. This assessment depends on a numberof different factors and developments. Further information on this topic can be found in note 14 ‘Income
taxes’.

5 Standards approved but not yet applied
The following new and revised standards and inter­
pretations had been published, though they had not
yet become compulsory by the time the consolidated
financial statements were approved by the Boardof Directors. Since their impact on the consolidated­financial statements has not yet been systematicallyanalyzed, the anticipated effects shown in the notes
to the table below represent an initial estimate bymanagement.

Standards
Standard/Interpretation
IAS 24 (revised) – ‘Related Party Disclosures’IAS 32 (revised) – ‘Financial Instruments: Presentation’
IFRS 9 (new) – ‘Financial Instruments’
IFRIC 14/IAS 19 (revised) – ‘The Limit on a Defined Benefit Asset,
Minimum Funding Requirements and their Interaction’
IFRIC 19 (new) – ‘Extinguishing Financial Liabilities with Equity Instruments’* No significant impact on the consolidated financial statements is expected.
** The impact on the consolidated financial statements cannot yet be determined with sufficient certainty.

Various adjustments of the standards have been published as part of the annual improvement project.
Since they have only a minor influence on the financial statements, we have refrained from listing thesechanges in detail.

Plannedapplication

*
*
**
**

Date effective
January 1, 2011
February 1, 2010
January 1, 2013
January 1, 2011

2011 business year
2011 business year
2013 business year
2011 business year*

July 1, 20102011 business yearForbo Annual Report 2010 – Consolidated financial statements 103

Notes

6 Segment reporting
Forbo is a global producer of Flooring Systems, Bonding Systems and Movement Systems. The business
units reflect the internal management structure andare run separately because the products that they
manufacture, distribute, and sell differ fundamentallyin terms of production, distribution and marketing.
Flooring Systems develops, produces, and sells linoleum, vinyl floorings, dirt trap systems, carpet tiles, andneedle felt as well as the various accessory products
required for laying, processing, cleaning, and care offlooring. Bonding Systems develops, manufactures,and distributes adhesives for industrial applications
and the construction industry as well as synthetic polymers. Movement Systems develops, produces, andsells high-quality belts made of synthetics for use inpower transmission or as conveyor and process belts.
Corporate includes the costs of the Group headquarters and certain items of income and expenses that are
not directly attributable to a specific business.
Flooring Systems, Movement Systems, Bonding Systems, and Corporate are reportable segments. The
identification of the reportable segments is based oninternal management reporting to the Chief Executive
Officer of the Group and hence on the financial in­formation used to review the performance of the operational units in order to reach a decision on the allocation of resources.
Segment information on the reportable segments forthe reporting period:

2010
CHF m
Total net sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
Operating assets
Number of employees (December 31)

Flooring
Systems
874.2
– 0.3
873.9
134.7
642.7
2,738

Bonding
Systems
606.6– 21.9
584.7
37.7
354.0
1,384

Movement
Systems
331.1
0.0
331.1
25.5
234.4
1,780

Corporate
0.0
0.0
0.0
– 12.020.8
41

Elimination– 22.2
22.2
0.0
0.0
0.0

Total
1,789.7
0.0
1,789.7185.9
1,251.9
5,943

Movement
Systems
310.5
0.0
310.5
0.5
258.1
1,793

Corporate
0.0
0.0
0.0
– 12.1
41.5
41

Elimination– 20.6
20.6
0.0
0.0
0.0

Total
1,782.4
0.0
1,782.4
121.8
1,419.7
5,958

Segment information on the reportable segments forthe previous year:
2009
CHF m
Total net sales
Inter-segment sales
Net sales to third parties
Operating profit (EBIT)
Operating assets
Number of employees (December 31)

Flooring
Systems
904.8
– 0.4
904.4
100.8
732.0
2,748

Bonding
Systems
587.7– 20.2
567.5
32.6
388.1
1,376

Management reporting and the internal control system are based on the same accounting principles asexternal reporting.

104 Forbo Annual Report 2010 – Consolidated financial statements

The Chief Executive Officer assesses the performanceof the reportable segments, based on their operating
result (EBIT). The net financial result is not allocated tothe divisions since it is Group treasury that in the main
exercises central control over the financial result.

Inter-segment sales are effected at arm’s length. The
divisions apply the same accounting principles as theGroup. Sales to third parties, as they are reported to
the Chief Executive Officer, are identical to the sales
reported in the income statement.
Reconciliation of division results to the income statement and balance sheet:

CHF mOperating profit (EBIT) according to segment information
Net financial income/expense (–)
Group profit before taxes

CHF mOperating assets
Non-operating assets
Total assets

2010

2009

185.9
28.9
214.8

121.8
– 20.4101.4

31.12.2010

31.12.2009

1,251.9242.3
1,494.2

1,419.7
325.7
1,745.4

2010
Third-party sales

31.12.2010
Operating assets

38.2
223.7
202.1
191.5
143.6
133.2
123.8
75.4
1,131.5420.2
238.0
1,789.7

89.3
148.1
125.2
284.5
185.5
77.1
35.6
31.4
976.7
170.6
104.6
1,251.9

Third-party sales and operating assets broken down by
region in the reporting period and during the previous
year:

CHF m
Switzerland (domicile)
FranceGermany
Benelux
Great Britain and IrelandSouthern Europe
Scandinavia
Eastern Europe
EuropeNorth, Central and South America
Asia/Australia/Africa
Total net sales to third parties and operating assets

Forbo Annual Report 2010 – Consolidated financial statements 105

CHF m
Switzerland (domicile)
FranceBenelux
Germany
Great Britain and IrelandSouthern Europe
Scandinavia
Eastern Europe
EuropeNorth, Central and South America
Asia/Australia/Africa
Total net sales to third parties and operating assets

In the period under review, no customer accounted
for sales that exceeded 10% of total Group sales.

2009
Third-party sales

31.12.2009
Operating assets

37.4
249.4
221.0
205.4
161.9
127.9
121.5
66.7
1,191.2
392.5
198.7
1,782.4

102.8
172.8
313.8
157.7
218.5
87.4
55.8
36.8
1,145.6
183.4
90.7
1,419.7

9 Other operating expenses

Development costs, which mainly comprise product­development, amounted to CHF 27.3 million (2009:
CHF 27.9 million).

‘Other operating expenses’ primarily comprises legal
costs, maintenance costs, warranties, costs for consulting and auditing, and insurance costs. The decrease
versus the previous year is largely the result of the­absence of restructuring costs and costs incurred inrelation to integrating Bonar Floors.

8 Administrative costs

10 Other operating profit

This item consists of the usual expenses related to­administrative activities.

‘Other operating profit’ includes insurance payments
received and proceeds from the sale of properties andof waste for recycling purposes.

7 Development costs

106 Forbo Annual Report 2010 – Consolidated financial statements

11 Personnel expenses

Personnel expenses
CHF mSalaries and wages
Social security contributions
Total personnel expenses

As at December 31, 2010, the Group had 5,943 employees (2009: 5,958). The average headcount over
the year was 5,979 (2009: 6,130). Salaries and wages
include share-based payments worth CHF 5.5 million(2009: CHF 4.5 million).

2010

2009

354.8
89.7
444.5

370.2
94.6
464.8

A bonus program is available for around 130 managers, which is linked to achieving financial targets set
for the Group, the divisions and individual objectives.

12 Financial income

Financial income
CHF m
Income from sale of shareholder options and dividend income
Interest income1)
Gains on sale of available-for-sale financial assets
Total financial income

2010

2009

0.0
1.2
43.2
44.4

2.1
1.6
0.6
4.3

1) In particular interest income from cash and cash equivalents.

Gains from the sale of securities (available-for-sale­financial assets) came to CHF 43.2 million in the period
under review. This sum included CHF 43.0 million fromthe sale of securities to related parties. On April 12,
2010, Forbo sold 288,691 Rieter shares to Artemis­Beteiligungen IV AG, a company owned by Michael
Pieper, at a price of CHF 320 per share. This price wasroughly CHF 12 higher than the average stock market
price for the preceding 20 days. The sale was struc-tured as a forward transaction. The shares were delivered and the sales price was paid on June 29, 2010. The
Group obtained CHF 92.4 million in cash and cash
equivalents from the sale of the Rieter shares in 2010,
posting financial income totaling CHF 43.0 million­before tax from the sale. As a result of this transaction,
Forbo has reduced its stake in Rieter from over 9% tobelow 3%.

Forbo Annual Report 2010 – Consolidated financial statements 107

13 Financial expenses

Financial expenses
CHF mLoss on sale of available-for-sale financial assets
Interest expenditure from financial liabilities valued at amortized cost
Gains from derivative financial instruments used in hedging
Gains (–)/losses on financial assets or liabilities at fair value through profit or loss
Amortization of issuance costs for private placement and bondTranslation gains (–)/losses, net
Translation gains from derivative financial instruments used in hedging
Translation losses on financial assets or liabilities at fair value through profit or loss
Total financial expenses

2010

2009

0.0
15.2
0.0
– 0.1
0.4
– 0.4
0.0
0.4
15.5

0.2
25.6
– 1.9
0.3
0.5
0.4
– 1.6
1.2
24.7

2010

2009

51.2
0.3
51.5

32.4
– 7.1
25.3

The average interest rate on interest-bearing debt­(private placements, bonds, non-current bank debt,
and current bank debt) in 2010 is 3.2% (2009: 3.6%).

14 Income taxes

Income taxes
CHF mCurrent income taxes
Deferred income taxes
Total income taxes

108 Forbo Annual Report 2010 – Consolidated financial statements

Analysis of tax expense
The following key elements explain the difference between the expected and the effective tax expense.

CHF mGroup profit before taxes
Tax expense at the expected tax rate
Tax effects of:
Non-tax-deductible expenses and tax-exempt income
Tax losses for which no deferred tax assets have been recognized and temporary differences
Write-off of deferred tax assets
Utilization of tax losses not capitalized in previous years
Previous-year and other positions
Total income taxes

Since the Group operates in various countries with different tax laws and rates, the annual expected and­effective tax expense depends on the origin of the­revenues or losses in each country. The expected tax
expense is the sum of the expected individual tax

2010

2009

214.8
– 52.2101.4– 23.6

– 4.3
– 0.2
– 5.7
12.8
– 1.9
– 51.5– 4.0– 0.3– 11.5
11.9
2.2– 25.3i­ncome/expense of all foreign subsidiaries. The expected individual tax income/expense in a country is cal­culated by multiplying the individual profit/loss by
the tax rate applicable in the country concerned. The­expected tax rate in 2010 was 24.3% (2009: 23.3%).

Forbo Annual Report 2010 – Consolidated financial statements 109

Tax loss carry forwards not capitalized and capitalized
as deferred income tax assets, broken down by maturity:
2010
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry forwards

2009
CHF m
Expiry after:
1 year
2 years
3 years
4 years
5 years
More than 5 years
Total tax loss carry forwards

In 2010, CHF 3.1 million (2009: CHF 1.5 million) of unused tax loss carry forwards expired.
Deferred income tax assets and liabilities are offset
when they relate to the same tax jurisdiction, provided

CHF mDeferred tax assets
Deferred tax liabilities
Deferred tax liabilities, net

Not capitalized

Capitalized

Total

4.5
6.2
4.3
4.6
37.5
163.5
220.6

0.0
0.0
0.1
1.4
0.0
17.5
19.0

4.5
6.2
4.4
6.0
37.5
181.0
239.6

Not capitalized

Capitalized

Total

5.6
43.1
7.0
4.6
5.2
275.1
340.6

0.0
0.0
0.0
0.2
3.1
31.5
34.8

5.6
43.1
7.0
4.8
8.3
306.6
375.4

that the legal right to offset exists, and they are intended either to be settled net or to be realized simultaneously. The following amounts are shown in the balance
sheet:

31.12.2010

31.12.2009

17.6– 54.3– 36.720.5– 62.7– 42.2

110 Forbo Annual Report 2010 – Consolidated financial statements

Deferred tax assets and liabilities, tax ­credits, and tax
charges from deferred taxes:
Deferred tax assets

Inventories
10.2
– 1.3
8.9

Property,plant, andequipment
12.3
– 3.3
9.0

Provisions
38.9
– 9.7
29.2

Loss carryforwards
10.3
– 6.3
4.0

Other
10.9
3.4
14.3

Total
82.6
– 17.2
65.4

Inventories
– 2.5
0.3
– 2.2

Property,plant, andequipment– 61.310.8– 50.5

Provisions– 12.9– 0.3– 13.2

Loss carryforwards
– 0.4
0.4
0.0

Other
– 47.7
11.5– 36.2

Total– 124.8
22.7– 102.1

Deferred tax assets/liabilities (–), net
as at December 31, 20097.7

– 49.026.0

9.9– 36.8– 42.2

Deferred tax assets/liabilities (–), net
as at December 31, 20106.7

– 41.516.0

4.0– 21.9– 36.7

CHF m
As at December 31, 2009
Decrease (–)/increase in deferred tax assets
As at December 31, 2010
Deferred tax liabilities

CHF m
As at December 31, 2009
Decrease/increase (–) in deferred tax liabilities
As at December 31, 2010

Decrease in deferred tax liabilities, net
Of which recognized in othercomprehensive income statement

5.5
5.8

Of which recognized in the income statement– 0.3

Tax expense and income recognized directly in thecomprehensive income statement:
2010

CHF m
Change in fair value of financial instruments
available-for-saleGain from sale of financial instruments
available-for-sale; transfer to income statement
Release of provisions
Actuarial losses on pension obligations
Cash flow hedges
Net investment hedges
Translation differences
Other comprehensive income

2009

Before tax

Tax expense(–)/income

After tax

Before tax

Tax expense(–)/income

After tax

14.7

– 3.0

11.7

26.7

– 5.5

21.2

– 18.03.7– 14.3

0.0

0.0

0.0

0.0
– 15.10.2– 4.7– 121.8– 144.7

0.0
2.9
0.0
0.0
2.2
5.8

0.0
– 12.20.2– 4.7– 119.6– 138.9

– 1.3
– 3.6
6.8
10.1
– 7.8
30.9

1.3
– 4.2
0.0
0.0
– 1.1
– 9.5

0.0
– 7.8
6.8
10.1
– 8.9
21.4

Forbo Annual Report 2010 – Consolidated financial statements 111

15 Earnings per share
Undiluted earnings per share are calculated by dividing the net profit or loss for the year attributableto registered shareholders by the weighted average
number of registered shares issued and outstanding
during the year, less the average number of treasury
shares.

The figure for diluted earnings per share also takes into
account the potential dilution effects if all issued andin the money share options were to be exercised.

Group profit for the year (CHF m)
Weighted average number of outstanding shares
Undiluted earnings per share (CHF)
Amount of shares adjusted for stock option plans
Weighted average number of outstanding shares used to calculate the diluted earnings per share
Diluted earnings per share (CHF)

2010
163.3
2,279,602
71.64
4,885
2,284,487
71.48

2009
76.1
2,259,839
33.67
578
2,260,417
33.67

112 Forbo Annual Report 2010 – Consolidated financial statements

16 Property, plant, and equipment

Cost on acquisition or valuation
CHF m
As at December 31, 2008
Additions
Disposals
Transfers
Translation differences
As at December 31, 2009
Additions
Disposals
Transfers
Translation differences
As at December 31, 2010Land andbuildings

Machineryandequipment

Other
property,plant, andequipment

Assets underconstruction

Total
property,plant, andequipment

404.9
3.6
– 23.3
0.9
– 3.3
382.8
2.9
– 24.91.4– 44.5
317.7

904.4
11.4
– 5.3
6.8
0.6
917.9
14.9
– 57.021.6– 118.0
779.4

151.1
3.1
– 4.3
12.5
– 0.3
162.1
3.3
– 7.0
1.5
– 20.4
139.5

23.4
20.8
0.0
– 20.6
– 0.6
23.0
16.2
– 0.8
– 24.5– 2.3
11.6

1,483.8
38.9– 32.9– 0.4– 3.6
1,485.8
37.3– 89.70.0– 185.2
1,248.2

Land andbuildings

Machineryandequipment

Other
property,plant, andequipment

Assets underconstruction

Total
property,plant, andequipment

0.4
15.5– 10.7
0.0
– 2.2
3.0
14.1
0.0
– 12.5
– 0.9
3.7

760.6
35.1
– 4.9
– 6.8
0.1
784.1
33.1
0.4
– 55.6– 97.0
665.0

135.0
8.3
– 4.0
6.3
1.7
147.3
5.8
0.0
– 6.5
– 18.7
127.9

1.5
0.0
0.0
0.0
0.0
1.5
0.0
0.0
0.0
– 0.1
1.4

897.5
58.9
– 19.6
– 0.5
– 0.4
935.9
53.0
0.4
– 74.6– 116.7
798.0

379.8
314.0

133.8
114.4

14.8
11.6

21.5
10.2

549.9
450.2

Accumulated depreciation and impairments
CHF m
As at December 31, 2008
Depreciation
Disposals
Transfers
Translation differences
As at December 31, 2009
Depreciation
Impairments
Disposals
Translation differences
As at December 31, 2010
Net book value
As at December 31, 2009
As at December 31, 2010

Forbo Annual Report 2010 – Consolidated financial statements 113

Land and buildings are valued in the balance sheet asat the revaluation date at fair value less accumulated
depreciation and impairments. Land and buildings
were revalued by independent experts on July 1, 2008.
The methods used for the revaluation in 2008 were fairvalue, capitalized value and cost-oriented valuation. In
applying the capitalized value method, the fair value
was determined using the discounted cash flow (DCF)
method. In the cost-oriented valuation, the fair value

CHF m
Cost on acquisition/manufacturing cost
Cumulative depreciation
Net book value

Property, plant, and equipment also include leased­assets with a net book value of CHF 0.3 million (2009:
CHF 0.3 million).
The sum insured for property damage for buildings,
machinery, equipment, and inventories came to CHF
2,080 million (2009: CHF 2,178 million).

was ascertained by means of the depreciated replacement cost method. The increase in net value was­recognized in the revaluation reserve in equity, taking
into account deferred taxes.
If land and buildings were carried at amortized cost on
acquisition or manufacturing cost, the figures would
be as follows:

2010

2009

404.4
– 228.7
175.7

468.1
– 260.2
207.9

Maintenance and repair costs amounted to CHF 29.7
million (2009: CHF 29.9 million). Depreciation totaling
CHF 53.0 million (2009: CHF 58.9 million) has beenposted under ‘Cost of goods sold’, ‘Development costs’,‘Marketing and distribution costs’, and ‘Administrative
costs’.

114 Forbo Annual Report 2010 – Consolidated financial statements

17 Intangible assets

Cost on acquisition
CHF m
As at December 31, 2008
Additions
Disposals
Transfers
Translation differences
As at December 31, 2009
Additions
Disposals
Transfers
Translation differences
As at December 31, 2010

Accumulated amortization and impairments
CHF m
As at December 31, 2008
Amortization
Disposals
Transfers
Translation differences
As at December 31, 2009
Amortization
Disposals
Transfers
Translation differences
As at December 31, 2010
Net book value
As at December 31, 2009
As at December 31, 2010

Intangible assets with an indefinite useful life (goodwill
and trademarks) are subject to an annual impairment
test at cash-generating unit level. The test is carriedout using a standardized method with discounted cash
flow to calculate the value in use. The cash flows forthe first 5 years are estimated by management. Growth

Goodwill

Trademarks

Otherintangible assets

Total

210.0
0.0
0.0
0.0
– 0.8
209.2
0.0
0.0
0.0
– 24.2
185.0

94.1
0.0
0.0
– 30.4
0.4
64.1
0.0
0.0
0.0
– 1.3
62.8

69.1
1.0
– 1.2
30.8
4.3
104.0
0.3
– 1.3
0.0
– 12.8
90.2

373.2
1.0
– 1.2
0.4
3.9
377.3
0.3
– 1.3
0.0
– 38.3338.0

Goodwill

Trademarks

Otherintangible assets

Total

13.4
0.0
0.0
0.0
– 1.1
12.3
0.0
0.0
0.0
– 2.1
10.2

32.8
0.0
0.0
0.0
– 0.2
32.6
0.0
0.0
0.0
0.0
32.6

15.3
7.9
– 1.2
0.5
0.8
23.3
5.0
– 1.4
0.0
– 2.1
24.8

61.5
7.9
– 1.2
0.5
– 0.5
68.2
5.0
– 1.4
0.0
– 4.2
67.6

196.9
174.8

31.5
30.2

80.7
65.4

309.1
270.4

is usually forecast at 1% for future years. The discountrate corresponds to the total weighted cost of capital
before taxes including an average risk charge estimated by the management which lies between 8.5% and12.6%.

Forbo Annual Report 2010 – Consolidated financial statements 115

Goodwill as at December 31, 2010, mainly comprised
goodwill from the Swift acquisition in 2002 and the
goodwill acquired in connection with the acquisitionof Bonar Floors in 2008. As at December 31, 2010, theitem trademarks mainly referres to the trademarks obtained through the acquisitions of Swift and Bonar
Floors.
The annual impairment test of goodwill from theBonar Floors acquisition yielded a value in use that wassignificantly higher than the book value. The discountrate applied was 8.5%. The intangible assets acquired
were also subject to impairment testing by means ofsensitivity analyses. The cash-generating unit under­
lying the goodwill impairment test is the Flooring Systems division. The cash-generating units linked to theimpairment testing of trademarks were those companies which generated sales using the trademarks. The
discount rate applied in the trademark impairment
tests was 12.6%.
The impairment test of goodwill and trademarks fromthe Swift acquisition in 2002 yielded a value in use thatwas higher than the book value. The cash generating
units underlying the impairment test were the com­panies acquired by the Bonding Systems division. The
discount rate applied in the impairment test was 8.5%.
The intangible assets were also subject to impairment
testing in the form of sensitivity analyses. Even with ahigher discount rate and a defensive business plan,
there would be no impairment of goodwill.

18 Investments in associates andother non-current assets

Investments in associates and other non-current assets
CHF m
Other investments in associates
Other non-current financial assets
Total investments in associates and other non-current assets

31.12.2010

31.12.2009

1.0
4.7
5.7

1.5
4.7
6.2

31.12.2010

31.12.2009

71.1
65.9
155.3
– 31.4
260.9

62.5
66.6
162.1
– 30.2261.0

19 Inventories

Inventories
CHF m
Raw materials and supplies
Work in progress
Finished goods
Provisions for inventories
Total inventories

Provisions for inventories amount to CHF 31.4 million(2009: CHF 30.2 million). Expenses for inventories recognized in the reporting period come to CHF 799.5
million (2009: CHF 781.0 million).

116 Forbo Annual Report 2010 – Consolidated financial statements

20 Trade receivables

Trade receivables
CHF m
Accounts receivable
Notes receivable
Allowance for doubtful trade receivables
Total trade receivables

Trade receivables after deduction of the allowance for
doubtful trade receivables amounting to CHF 19.9 million (2009: CHF 21.1 million) come to CHF 220.8 million(2009: CHF 237.1 million).
As a rule, no default interest is charged for receivables
past due. As at the reporting date, there was no indi­
cation that debtors would fail to meet their payment
obligations in respect of trade receivables for which noallowance was made or which were past due. Allowances are made in the form of a specific valuation­allowance for losses. A specific valuation allowance isrequired if the debtor is unable to pay, if the debt has
been past due for more than 90 days or the debtor has

CHF m
Total trade receivables, gross
Of which not due
Of which past due for:Less than 30 days
Between 31 and 90 days
Between 91 and 180 days
Between 181 days and 1 year
Over 1 year
Allowance for doubtful trade receivables
Total trade receivables

As at December 31, 2010, CHF 28.2 million in trade­receivables were past due but not the subject of a valuation allowance; an allowance was made and a reserve established for trade receivables totaling CHF
38.5 million.

31.12.2010

31.12.2009

214.5
26.2
– 19.9
220.8

223.2
35.0
– 21.1
237.1

given notice of payment difficulties. Valuation allowances take due account of default risks. In addition to
the specific allowance, a portfolio allowance may bemade. For this purpose, trade receivables with similarrisk characteristics for which an additional allowance
may be necessary are grouped together and reviewed.
The decision as to whether to make a portfolio allowance in addition to a specific valuation allowance isdetermined by whether past loss experience indicatesthat an allowance could be required.
Trade receivables capitalized as at the balance sheet
date:

31.12.2010

31.12.2009

240.7
198.9

258.2
205.4

20.8
9.5
3.2
6.5
1.8
– 19.9
220.8

26.7
10.7
4.9
8.1
2.4
– 21.1237.1

Forbo Annual Report 2010 – Consolidated financial statements 117

Gross value of trade receivables by currency:
31.12.2010

31.12.2009

1.6
119.7
17.8
17.6
8.6
34.4
41.0
240.7

1.2
143.6
21.2
15.7
9.0
34.1
33.4
258.2

2010

2009

– 21.1
– 4.4
1.1
2.5
2.0
– 19.9– 20.3
– 5.5
1.1
3.5
0.1
– 21.1

CHF m
CHF
EUR
GBP
JPY
SEK
USD
Other
Total trade receivables, grossChanges in valuation allowances for doubtful trade­receivables during the reporting year:

CHF m
As at January 1
Additions
ReleaseUse
Translation differences
As at December 31

The creation and release of allowances for doubtful
trade receivables are included in ‘Marketing and distribution costs’ in the income statement.

21 Marketable securities‘Marketable securities’ mainly comprises registeredshares of Rieter Holding AG, as valued at the closing
price on the SIX Swiss Exchange on the last day of­trading in the year under review.

118 Forbo Annual Report 2010 – Consolidated financial statements

22 Cash and cash equivalents

Cash and cash equivalents
CHF m
Cash
Bank accounts
Short-term deposits with banks
Total cash and cash equivalents

The change in cash and cash equivalents can be foundin the consolidated cash flow statement.
23 Pledged or assigned assets
There were no significant pledged or assigned assets.

31.12.2010

31.12.2009

0.1
152.5
18.8
171.4

0.2
177.0
21.0
198.2

24 Share capital
The share capital of Forbo Holding Ltd stood at CHF
271,315 on December 31, 2010 (2009: CHF 271,315)
and was divided into 2,713,152 registered shares witha par value of CHF 0.10, including 21,419 registeredshares without voting or dividend rights at the disposal of the Board of Directors. Consequently, 2,691,733
registered shares were eligible for dividends as at December 31, 2010.
Change in shares in circulation:

Total shares outstanding
Treasury shares
Shares with dividend rights:
Treasury shares
Share buyback 2008
Shares with no dividend rights
Total treasury shares
Total shares in circulation

At the Ordinary General Meeting of Shareholders ofForbo Holding Ltd on April 24, 2009, the Board of Directors was authorized to sell or to use for acquisitions
or for securing convertible or option rights the 213,152
treasury shares acquired as part of the second tradingline share-buyback program approved by the Ordinary

31.12.2010
Number2,713,152

ChangeNumber031.12.2009
Number2,713,152

139,419
213,152
21,419373,9902,339,162– 72,569
00– 72,569
72,569211,988
213,152
21,419446,559
2,266,593

General Meeting on April 25, 2008. At the Ordinary
General Meeting on April 29, 2011, the Board of Di­
rectors will propose that the 213,152 treasury shares
repurchased via the second trading line on the SIX
Swiss Exchange be destroyed.

Forbo Annual Report 2010 – Consolidated financial statements 119

25 Stock option plan
On March 15, 2006, the Board of Directors approved
the introduction of the Management Investment Plan
(MIP). Members of the Board of Directors are not party
to the MIP. Under the MIP, participants receive at least
50% of the variable component of their compensationin the form of shares and options. The share-based
portion of the variable compensation is recognized atfair value, offset by equity instruments and entered asa corresponding increase in equity. The shares are issued at the average market price for the first 14 trading

days in January of the current year. The options are­issued on the basis of a valuation by an independentbank, whereby the valuation is based on the average
market price of the shares in the first 14 trading daysin January of the current year. Equities and options are
subject to a three-year vesting period. The term of theoptions is 5 years. Shares and options issued under the
MIP are equity-settled.
Options
Change in the number of outstanding options andtheir weighted average strike price:
2010

Options outstanding as at January 1
GrantedForfeited
Exercised
ExpiredOptions outstanding as at December 31

2009

Weighted
averagestrike price

Numberof options

Weighted
averagestrike price

Numberof options

438
435
0
322
0
484

30,8235,165
0– 10,394
025,594

499
215
0
220
0
438

24,206
8,117
0– 1,500
030,823Of the outstanding 25,594 options (2009: 30,823),
6,268 were exercisable as at December 31, 2010 (2009:
10,894). The exercise of 10,394 options (2009: 1,500)
resulted in the issue of 10,394 Forbo Holding Ltd shares(2009: 2,500) at a weighted average strike price of

CHF 322 (2009: CHF 220). The weighted average shareprice on the exercise days was CHF 490 (2009: CHF
254). The expense for equity-settled options charged
to the income statement in accordance with IFRS 2
amounted to CHF 0.7 million (2009: CHF 0.3 million).

120 Forbo Annual Report 2010 – Consolidated financial statements

Information on the outstanding options as at December 31, 2010:

Series
2006
2007
2008
2009
2010
Total options outstanding

In the year under review, a total of 5,165 equity-settled
options (2009: 8,117) were issued under the MIP. The
fair value of these options was CHF 117.1 (2009: CHF
34.8). The options were valued in accordance with theBlack-Scholes model using the following input factors:
share price at issue date CHF 452 (2009: CHF 172),
strike price CHF 435 (2009: CHF 215), volatility 29.0%(2009: 35.8%), expected time to maturity 4.1 years(2009: 4.1 years), dividend yield 1.3% (2009: 2.3%) andrisk-free interest rate 1.6% (2009: 1.8%). The expectedvolatility is based on adjusted historical market dataover a period comparable to the expected lifetime ofthe options. The expected term applied in the calculation model has been adapted, using the best possible
estimates to allow for restrictions on exercise rights
and possible behavior patterns.

Strike price
(CHF)

370
565
822
215
435

Number ofoutstanding
options

Averageremainingterm (years)

Number of
exercisable
options

500
5,768
6,044
8,117
5,165
25,594

0.3
1.2
2.2
3.3
4.3
1.9

500
5,768
0
0
0
6,268

SharesUnder the MIP, 1,061 shares in Forbo Holding Ltd were
issued in the year under review (2009: 1,643). The shareprice as at the reporting date was CHF 452 (2009:
CHF 169).
The Delegate of the Board of Directors and CEO is­remunerated primarily with shares. On the basis of an
employment contract signed in 2005, 47,395 shareswere issued in 2006 at a fair value of CHF 270 each forthe entire five-year contract term (2006 to 2010). Theseshares are vested until December 31, 2010. The corresponding personnel expenses have been charged tothe income statement over the term of the contract on
a pro rata basis. With effect from January 2009, the­employment contract with the Delegate of the Boardof Directors and CEO was extended to run until end of
April 2013. Compensation will again be paid mainly inshares, which in accordance with IFRS 2 has been recognized on a pro rata basis for the year under review.
In the year under review, the total amount charged tothe income statement in accordance with IFRS 2 forshares issued to the Executive Board and Board of Directors came to CHF 4.8 million (2009: CHF 4.2 million).

Forbo Annual Report 2010 – Consolidated financial statements 121

26 Non-current financial debt

CHF m
Outstanding private placement and bondUnamortized issuance cost
Total outstanding private placements and bonds
Bank debt
Lease obligations
Less current portion
Total non-current financial debt

Maturities of non-current financial debt
CHF m
After 1 year
After 2 years
After 3 years
5 + years
Unamortized costs
Total non-current financial debt

Forbo Holding Ltd issued a CHF 150.0 million four-yearbond on July 6, 2009 (maturity: July 31, 2013).

31.12.2010

31.12.2009

196.9
– 1.0
195.9
62.7
0.9
– 63.0
196.5

201.6
– 1.4
200.2
349.0
1.3
– 0.4
550.1

31.12.2010

31.12.2009

47.2
150.3
0.0
0.0
– 1.0
196.5

183.4
218.0
150.1
0.0
– 1.4
550.1

The bond has a coupon of 4 1/8% and has been tradedon the SIX Swiss Exchange since July 20, 2009.

Derivatives:
Financial derivatives

Derivative financial instruments as at December 31, 2009
Derivative financial instruments as at December 31, 2010

Financial derivatives are valued at fair value in accordance with IAS 39. The replacement value (sum of all
positive and negative fair values) as at December 31,
2010, was CHF – 0.3 million (2009: CHF + 0.4 million).

Numberof contracts

Gross value
hedgedCHF mUnrealized gain/loss (–)
CHF m

24
3

15.8
21.5

0.4
– 0.3

The private placement and bond are measured at­amortized cost using the effective interest method.

Outstanding private placement and bondas at December 31, 2010
Company
Private placement: Forbo NL Holding B.V.
(guaranteed by Forbo Holding Ltd)
Bond: Forbo Holding Ltd

Currency
USD

m
50.0

Term
2002 – 2012

Interest rate
6.290%

CHF

150.0

2009 – 2013

4.125%

122 Forbo Annual Report 2010 – Consolidated financial statements

Financial covenants
The private placement, bond, and bank debt containstandard general covenants. The private placement
and part of the bank debt also contain financial covenants, i.e. a defined maximum debt gearing (the ratioof consolidated net debt to consolidated EBITDA may
not exceed 3 to 1), a defined minimum interest coverage ratio (ratio of consolidated EBITDA to consolidated
net interest payable may not be less than 4 to 1), andcapital adequacy rules (shareholders’ equity in the consolidated balance sheet may not fall below CHF 535.5
million).

The private placement, the bond, and part of the bankdebt include standard events of default. All facilities are
unsecured (with the exception of guarantees provided
by Forbo Holding Ltd as surety for its subsidiaries).
27 Employee benefit obligations
The Group has established several pension plans
based on the specific requirements in the countries inwhich it operates. The Group has both defined con­tribution and defined benefit plans. The liabilities andassets under the main defined benefit plans are assessed annually by independent actuaries using the
projected unit credit method. The Group’s largest­pension plans are in the Netherlands and the United
Kingdom.
Pension costs for defined benefit plans:

Actuarial net periodic pension costs
CHF mCurrent service cost, net
Interest costs
Expected return on plan assets
Curtailments and settlements
Total actuarial net periodic pension costs

2010

2009

11.5
32.6
– 27.1
– 0.4
16.6

12.0
35.1
– 22.9– 0.6
23.6

Forbo Annual Report 2010 – Consolidated financial statements 123

Changes in defined benefit obligations under the­defined benefit plans:

CHF m
As at January 1
Current service cost, net
Employee contributions
Interest costs
Benefits paid
Actuarial losses
Curtailments and settlements
Translation differences
As at December 31

2010

2009

635.5
11.5
4.4
32.6
– 27.031.0– 3.3– 84.8
599.9

575.1
12.0
4.9
35.1
– 24.9
30.6
– 4.8
7.5
635.5

2010

2009

566.9
27.1
17.8
4.4
15.9
– 27.0– 2.9– 77.0
525.2

516.5
22.9
14.8
4.9
27.0
– 24.9
– 4.2
9.9
566.9

Changes in expected plan assets of the defined benefit
plans at fair value:

CHF m
As at January 1
Expected return on plan assets
Employer contributions
Employee contributions
Actuarial gains
Benefits paid
Curtailments and settlements
Translation differences
As at December 31

The actual return on plan assets comes to CHF 43.0
million (2009: 49.9 million).

124 Forbo Annual Report 2010 – Consolidated financial statements

The present value of defined benefit pension liabilities
and plan assets as at year-end:

CHF m
Present value of defined benefit liabilities
Fair value of plan assets
Net liabilities/assets (–)
Net assets not recognized in the balance sheet
Net liabilities/assets (–) recognized in the balance sheet

31.12.2010

31.12.2009

31.12.2008

31.12.2007

31.12.2006

599.9– 525.2
74.7
0.0
74.7

635.5
– 566.9
68.6
0.0
68.6

575.1
– 516.5
58.6
0.0
58.6

734.9
– 750.5– 15.6
12.5
– 3.1

807.2
– 761.4
45.8
0.0
45.8

2010

2009

2008

2007

2006

– 7.7
– 1.2%

8.8
1.5%

0.6
0.0%

0.3
0.0%

15.5
2.0%

15.9
2.8%

27.0
5.2%

– 96.9– 12.9%– 26.6– 3.5%

6.6
1.0%

Actuarial gains and losses linked to experience adjustments used to value the defined benefit plan assets
and liabilities:

Experience adjustments
CHF m
Plan liabilities
Actuarial losses (–)/gains
Percentage of plan liabilities
Plan assets
Actuarial gains/losses (–)
Percentage of plan assets

Actuarial gains and losses are recognized in the balance sheet under ‘Pension liabilities’ and presented­directly in the other comprehensive income.

Most of the pension plans are financed in full or in partvia outsourced funds. Pension liabilities amounting
to CHF 37.8 million (2009: CHF 38.7 million) of a totalof CHF 599.9 million (2009: CHF 635.5 million) are notfinanced via a fund.

Forbo Annual Report 2010 – Consolidated financial statements 125

Changes in net liabilities of defined benefit plans recognized in the balance sheet:

CHF m
Net liabilities as at January 1
Total pension expenses included in personnel expenses
Employer contributions
Actuarial losses
Translation differences
Net liabilities as at December 31

2010

2009

68.6
16.6
– 17.8
15.1
– 7.8
74.7

58.6
23.6
– 14.8
3.6
– 2.4
68.6

2010

2009

– 2.9
– 15.1
3.4– 14.6

– 0.6
– 3.6
1.3
– 2.9

Actuarial gains and losses on defined benefit plans recognized in the comprehensive income statement:

Cumulative recognized gains and losses
CHF mActuarial losses as at January 1
Actuarial losses in the current period
Translation differences
Total actuarial losses as at December 31

The actuarial loss in the year under review compriseda gain of CHF 15.9 million (2009: CHF 35.8 million) anda loss of CHF 7.7 million (2009: CHF 0.0 million) linked
to past experience adjustments and a CHF 23.3 million(2009: CHF 39.4 million) loss caused by changes in assumptions.

%
Discount rate
Expected return on plan assets
Future salary increases
Inflation

The expected return on plan assets is derived fromlong-term government bonds in the respective currency zones.

Principal actuarial assumptions used for accounting
purposes for defined benefit plans (expressed asweighted averages):

2010

2009

5.2
4.8
3.2
2.3

5.4
4.4
3.0
2.3

126 Forbo Annual Report 2010 – Consolidated financial statements

Weighted average asset allocation of the defined benefit plan assets as at December 31:%
Shares
Bonds
Real estate
Cash and other investments
Total plan assets as at December 31

Future contributions are estimated in the subsequent
year based on the current year levels.

2010

2009

25.0
73.0
1.0
1.0
100.0

27.0
71.0
1.0
1.0
100.0

The cost of the contributions to defined contribution plans, which is included in personnel expenses,
amounted to CHF 4.7 million (2009: CHF 5.3 million).

28 Provisions

Provisions
CHF m
At January 1
Additions
Used during the year
Reversed during the year
Translation differences
As at December 31
Of which current provisions
Of which non-current provisions

Warranty
provisions

Environmental
provisions

Provisions
for legal
claims

Personnel
provisions

Other
provisions

Total
2010

Total
2009

2.2
2.2
– 2.0
– 0.2
– 0.4
1.8

0.0
0.0
0.0
0.0
0.0
0.0

17.7
2.8
– 0.4
– 0.1
– 0.2
19.8

19.2
10.1
– 16.1
– 0.8
– 0.9
11.5

32.6
1.0
– 8.7
– 0.4
– 0.4
24.1

71.7
16.1
– 27.2
– 1.5
– 1.9
57.2

55.6
32.9
– 6.7
– 10.4
0.3
71.7

1.2
0.6

0.0
0.0

0.0
19.8

7.7
3.8

13.0
11.1

21.9
35.3

32.9
38.8

Warranty provisions are linked to product sales and are
based on past experience figures. Experience showsthat cash outflows tend to be spread evenly over the
warranty period of five to ten years. The provisions forlegal claims relate mainly to product liability claims inwhich the Group is involved in the course of its normal
business.

The personnel provisions comprise the bonus programs, provisions for paid leave and severance payments in connection with the downsizing programs.
The items ‘Personnel provisions’ and ‘Other provisions’
include the use of restructuring provisions and pro­visions for structural adjustments formed in 2009.

Forbo Annual Report 2010 – Consolidated financial statements 127

29 Trade payables

Trade payables
CHF m
Accounts payable
Notes payable
Total trade payables

31.12.2010

31.12.2009

134.3
1.4
135.7

122.4
0.9
123.3

31.12.2010

31.12.2009

48.3
70.1
118.4

57.2
68.1
125.3

30 Accrued expenses

Accrued expenses
CHF m
Accrued expenses for compensation and benefits to employees
Other accrued expenses
Total accrued expenses

Accrued expenses for compensation and employee
benefits mainly comprise overtime accruals and provisions. Other accrued expenses include volume rebates,

commissions, premiums, interest, and accrued warranty costs and similar items.

31 Current financial debt

Current financial debt
CHF mCurrent bank loans and overdrafts
Current portion of non-current debt
Total current financial debt

For information on covenants, see note 26 ‘Non-current financial debt’.

31.12.2010

31.12.2009

2.9
63.0
65.9

3.0
0.4
3.4

128 Forbo Annual Report 2010 – Consolidated financial statements

32 Contingent liabilities

CHF mContingent liabilities

31.12.2010

31.12.2009

0.8

0.6

2010

2009

10.2
16.7
5.5
32.4

9.7
14.4
3.3
27.4

The item ‘Contingent liabilities’ refers to sureties andguarantees in favor of third parties.

33 Leasing

Leasing
CHF mOperating leasing liabilities:
Up to 1 year
2 – 5 years
More than 5 years
Total operating leasing liabilities:

Expenses for operating leasing and rentals totaled
CHF 25.4 million (2009: CHF 27.4 million). The Group
has no significant operating leasing contracts.

Finance lease liabilities stood at CHF 0.9 million at yearend 2010 (2009: CHF 1.3 million) and appear under‘Non-current financial debt’.

Forbo Annual Report 2010 – Consolidated financial statements 129

34 Additional information on
financial instruments
The financial instruments held at the accounting datefall into the following categories:
As at December 31, 2010
CHF m
AssetsTrade receivables and other receivables
Other financial assets
Cash and cash equivalents
Marketable securities
Financial derivatives
Total assets

Cash andcash equivalents

Loans andreceivables

Derivatives used
for hedging

Financial assets
available-for-sale

249.2
4.6
171.4
47.4
171.4

CHF m
Liabilities
Interest-bearing debt
Financial derivatives
Trade payables and other payables1)
Total liabilities

253.8

0.0

47.4

Financial liabilities
at amortized costs

Derivatives used
for hedging

Financial
instruments held
for trading

262.2
0.3
154.7
416.9

0.3

0.0

Loans andreceivables

Derivatives used
for hedging

Financial assets
available-for-sale

As at December 31, 2009
CHF mAssetsTrade receivables and other receivables
Other financial assets
Cash and cash equivalents
Marketable securities
Financial derivatives
Total assets

CHF m
Liabilities
Interest-bearing debt
Financial derivatives
Trade payables and other payables1)
Total liabilities

1)

Excluding sales tax.

Cash andcash equivalents

269.6
4.7
198.2
100.2
198.2

274.3

0.5
0.5

100.2

Financial liabilities
at amortized costs

Derivatives used
for hedging

Financial
instruments held
for trading

553.0
0.1
144.5
697.5

0.1

0.0

130 Forbo Annual Report 2010 – Consolidated financial statements

The following table classifies the financial instrumentsthat are valued at fair value in a three-level hierarchy:–– Level 1: Market prices for identical assets and lia­
bilities.

As at December 31, 2010
CHF m
Financial assets available-for-saleFinancial derivatives
Total assets
Financial derivatives
Total liabilities

As at December 31, 2009
CHF m
Financial assets available-for-saleFinancial derivatives
Total assets
Financial derivatives
Total liabilities

35 Acquisition of subsidiaries
As in 2009, the Group did not acquire any subsidiaries
in the year under review.

–– Level 2: Input factors other than market prices included in level 1 that are observable for the asset or
liability, either directly (i.e. as prices) or indirectly (i.e.
derived from prices).
–– Level 3: Input factors for the asset or liability that are
not based on observable market data (non-observable inputs).

Level 1
47.4

Level 2

Level 3

0.3
0.3

0.0

Level 2

Level 3

0.5
0.5
0.1
0.1

0.0

47.4
0.0

Level 1
100.2
100.2
0.0

Total
47.4
0.0
47.4
0.3
0.3

Total
100.2
0.5
100.7
0.1
0.1

Forbo Annual Report 2010 – Consolidated financial statements 131

36 Related party transactions
Compensation paid to members of the Board of Directors and E­ xecutive Board:
Executive Board
CHF mRemuneration
Employer contributions to the pension scheme
Other long-term benefits
Termination benefits
Share-based payments
Total payments

2010
2.6
0.4
0.0
0.0
1.41)
4.4

2009
2.4
0.4
0.0
0.0
0.5
3.3

Board of Directors
2010
0.8
0.2
0.0
0.0
3.92)
4.9

2009
0.8
0.2
0.0
0.0
3.9
4.9

Total
2010
3.4
0.6
0.0
0.0
5.3
9.3

2009
3.2
0.6
0.0
0.0
4.4
8.2

1) In addition to the estimated, performance-related variable remuneration within the framework of the MIP (see note 25 ‘Stock
option plan’) for 2010, amounting to CHF 2.6 million, this figure
includes the difference, amounting to CHF – 1.2 million, between
the bonuses deferred at the end of 2009 (payable in equity instruments) and the value of the equity instruments actually issued in
the year under review.

2) The sum of CHF 3.9 million includes share-based payments to theBoard of Directors and to the Delegate of the Board of Directors
and CEO, which is unchanged from the previous year.

The compensation paid to the Executive Board in 2010
consisted of the gross basic salary, private use of acompany car, and social security payments made by
the company. Employer contributions to the pension
fund are reported separately. Share-based payments
to the Executive Board consist of performance-based
variable remuneration under the MIP (see note 25‘Stock option plan’) for 2010 amounting to CHF 2.6­million (payable in spring 2011) minus the difference,amounting to CHF – 1.2 million, between the bonuses
deferred at the end of 2009 (payable in equity instruments) and the value of the equity instruments actually issued in 2010.

With effect from January 2009, the employment contract of the Delegate of the Board of Directors and CEO
was extended and continues until end-April 2013.
Compensation will again be paid mainly in shares. The
modalities are very similar to the provisions of the firstcontract. The 29,775 shares are vested until December
31, 2013. The share-based payments made to theBoard of Directors include the annual portion of the
Forbo shares allocated to the Delegate of the Board of
Directors and CEO in 2005 which amounted to CHF 2.6
million (2009: CHF 2.6 million) plus the additional annual portion of the shares of Forbo Holding Ltd allocated to the Delegate of the Board of Directors and
CEO totaling CHF 1.1 million (2009: 1.1 million) pursuant to the extension of the employment contract until
the end of April 2013. In accordance with IFRS 2, theseshares have been recognized on a pro rata basis.

The compensation paid to the Board of Directors included CHF 0.3 million (2009: CHF 0.3 million) for theDelegate of the Board of Directors and CEO. This included an annual amount of CHF 0.15 million (2009:
CHF 0.15 million) to cover employee contributions to
the pension plan and social security, and CHF 0.17 million (2009: CHF 0.17 million) for private use of a company car, employer contributions to the pension planand to AHV/ALV (old-age and unemployment insurance) plus accident and daily sickness benefits insurance. Employer contributions to the pension plan arereported separately. Current payment benefits for nonexecutive Board members of Forbo Holding Ltd totaled CHF 0.5 million (2009: CHF 0.5 million).

Moreover, the share-based payments made to theBoard of Directors included 631 shares in Forbo Holding Ltd allocated to the non-executive members of
the Board of Directors in 2010 (2009: 1,135 shares) witha fair value of CHF 0.3 million (2009: CHF 0.2 million).

132 Forbo Annual Report 2010 – Consolidated financial statements

Further details relating to the compensation paid to
the Executive Board and the Board of Directors can befound in note 17 ‘Disclosure of compensation paid to
the Board of Directors and the Executive Board pursuant to Articles 663bbis and 663c of the Swiss Codeof Obligations’ in the financial statements for Forbo
Holding Ltd.
On April 12, 2010, Forbo sold 288,691 Rieter shares to
Artemis Beteiligungen IV AG, a company owned by­Michael Pieper, at a price of CHF 320 per share. This
price was around CHF 12 higher than the averagestock market price for the preceding 20 days. The sale
was structured as a forward transaction. The shareswere delivered and the sales price was paid on June29, 2010. The Group obtained CHF 92.4 million in cash
and cash equivalents form the sale of the Rieter shares,
posting financial income totaling CHF 43.0 million before tax from the sale.
Enia Carpet Group AG constitutes a related party because the Forbo Group holds a 33 1/3% stake. In theyear under review, the Forbo Group bought products
from Enia Carpet Group AG worth CHF 1.6 million(2009: CHF 3.0 million), while the Enia Carpet Groupbought products from the Forbo Group worth CHF 0.1
million. The goods were sold to and purchased from
related parties at market conditions. As at December
31, 2010, Forbo had no significant receivables duefrom or liabilities to related parties.

37 Risk assessment and financial
risk management
The tasks of the Board of Directors include identifying
risks, determining suitable measures, and implementing those measures or having them implemented. The
Board of Directors of Forbo Holding Ltd conducted aGroup-wide risk assessment in the year under review
and also determined which risks were be managed byparticular management levels. The Board of Directors
is closely involved in the assessment of strategic risks
and, in consultation with the Executive Board, ensuresthat operational risks are dealt with appropriately
and duly reported. This approach gives the Board acomplete overview of the key risks and measures. This
broad overview enables the Group to set priorities andallocate the necessary resources.
Financial risk management
In its day-to-day operations, the Forbo Group uses
­derivative and non-derivative financial instruments tomanage the risks and opportunities arising from fluctuations in exchange rates and interest rates. The various risks associated with existing assets and liabilities
as well as planned and anticipated transactions aremonitored and managed centrally – with due regard
to the Group’s overall risk exposure. In line with theGroup’s hedging policy, Corporate Treasury constantly
monitors both the risk exposure and the effectivenessof the hedging instruments and issues recommendations with regard to partial or complete hedging ofexisting risks.
The Group’s risk management policy does not permit
the use of derivatives for speculation. In order to manage counterparty risk, derivative financial transactions
are concluded only with first-class banks. The creditworthiness of these institutions is assessed on the basis of evaluations by leading rating agencies.
Derivatives include instruments used by the company
to manage foreign currency and interest risks or combinations thereof.

Forbo Annual Report 2010 – Consolidated financial statements 133

Translation risk management
Risks arising from short-term currency exposure cre­ated by purchases and sales of goods and services(transaction risks) are identified, and selective hedging
strategies are implemented in line with an ongoing­assessment of exchange rate movements. The Group
uses only foreign exchange forward and option contracts with maturities of below fifteen months tohedge against transaction risk.

The following table shows the sensitivity of profit before tax and of shareholders’ equity to changes in theexchange rate of the US dollar, the euro, the poundsterling , and the Swiss franc. The table illustrates sen­sitivity in relation to transaction risks and cash flow
hedges. Translation risks, the effects of loans that qualify as net investments, and net investment hedges
have not been taken into account.

Furthermore, risks associated with the translation of­assets and liabilities denominated in foreign currencies(translation risks) are managed by establishing an appropriate financing policy that includes net investment hedges.
2010
Change inexchange rate5%
– 5%

Impact on profit
before tax
0.4
– 0.4

Impact on
shareholders’ equity
0.0
0.0

USD/CHF

5%
– 5%

0.4
– 0.4

0.0
0.0

EUR/USD

5%
– 5%

0.4
– 0.4

0.0
0.0

GBP/CHF

5%
– 5%

0.1
– 0.1

0.0
0.0

GBP/EUR

5%
– 5%

0.1
– 0.1

0.0
0.0

Change inexchange rate5%
– 5%

Impact on profit
before tax
0.9
– 0.9

Impact on
shareholders’ equity
0.0
0.0

USD/CHF

5%
– 5%

0.3
– 0.3

0.0
0.0

EUR/USD

5%
– 5%

0.7
– 0.7

0.5
– 0.5

GBP/CHF

5%
– 5%

0.1
– 0.1

0.0
0.0

GBP/EUR

5%
– 5%

– 0.1
0.1

0.0
0.0

CHF m
EUR/CHF2009
CHF m
EUR/CHF

134 Forbo Annual Report 2010 – Consolidated financial statements

Management of interest-rate risks
Interest-rate risks arise from changes in the fair valueof interest-bearing assets and liabilities caused by fluctuations in interest rates. Since these risks may have anegative effect on net financial profit and shareholders’equity, the Group uses derivatives to manage them ona case-by-case basis. The table below shows the sensitivity of profit before tax and of shareholders’ equity to
the stated changes in interest rates for cash and cash

equivalents, interest-bearing debt and financial derivatives.
An average figure has been used for cash and cash
equivalents as the final amount is not significant forcalculating interest-rate sensitivity. The average was arrived at by taking the arithmetic mean of the initial andfinal amounts.

2010
Change ininterest rate
50bp
– 50bpImpact on profit
before tax
0.1
– 0.1

Impact on
shareholders’ equity
0.0
0.0

USD

50bp
– 50bp

0.1
– 0.1

0.0
0.0

CHF

50bp
– 50bp

0.1
– 0.1

0.0
0.0

Change ininterest rate
50bp
– 50bpImpact on profit
before tax
– 0.2
0.2

Impact on
shareholders’ equity
0.0
0.0

USD

50bp
– 50bp

0.1
– 0.1

0.0
0.0

CHF

50bp
– 50bp

– 0.9
0.9

0.0
0.0

CHF m
EUR

2009
CHF m
EUR

In 2009, all derivatives linked to the US private placement were repaid. As a result, changes in interest
rates no longer have any direct effect on shareholders’­equity.

Forbo Annual Report 2010 – Consolidated financial statements 135

Management of liquidity risksGroup companies need sufficient cash in order tomeet their liabilities. Corporate Treasury is responsible
for managing liquidity surpluses. The share of the­aggregate cash and cash equivalents and securities
managed by Corporate Treasury was around 64% on
December 31, 2010. The Group has sufficient liquidity
reserves (as at December 31, 2010, CHF 171.4 million
in cash and cash equivalents and CHF 47.4 million insecurities) to be able to meet its commitments at any

time. At present, the Group regards a liquidity stock ofroughly CHF 100 million as sufficient to meet its payment obligations at all times.
The maturity structure of the existing financial liabilities is shown in the following table. These liabilities correspond to contractually-agreed maturities and represent nominal payment outflows. Inflows and outflows
of funds from derivatives are shown separately.

As at December 31, 2010

CHF m
Liabilities to banks
Interest-free liabilities
Leasing contract liabilities
Liabilities from private placements and bonds
Cash outflow from financial derivatives
Cash inflow from financial derivatives

Remaining term
to maturity up to
1 year
66.6
154.7
0.4
9.2
21.9
21.5

Remaining term
to maturity
1 – 2 years
0.2
0.1
0.3
56.1
0.0
0.0

Remaining term
to maturity
2 – 5 years
0.0
0.0
0.3
156.2
0.0
0.0

Remaining term
to maturity
over 5 years
0.0
0.1
0.0
0.0
0.0
0.0

Remaining term
to maturity up to
1 year
5.9
142.8
0.4
9.5
15.5
– 15.8

Remaining term
to maturity
1 – 2 years
183.8
0.9
0.4
9.5
0.0
0.0

Remaining term
to maturity
2 – 5 years
166.3
0.0
0.5
217.3
0.0
0.0

Remaining term
to maturity
over 5 years
0.0
0.2
0.0
0.0
0.0
0.0

As at December 31, 2009

CHF m
Liabilities to banks
Interest-free liabilities
Leasing contract liabilities
Liabilities from private placements and bonds
Cash outflow from financial derivatives
Cash inflow from financial derivatives

Management of credit risks
Credit risks arise from the possibility that customers
may not be able to meet their agreed commitments.
To manage this risk to a sufficient extent, the creditworthiness of the different customers is constantly
monitored. Credit risks are diversified through thecompany’s broad customer base in different segments

and geographic regions. With regard to counterparty
risk exposure to banks, Group-wide directives stipulatethat financial investments and other financial transactions must only be made with first-class banks. Given
the credit ratings of these counterparties, the Group
does not anticipate any defaults.

136 Forbo Annual Report 2010 – Consolidated financial statements

Capital management
For the Group, capital management means both optimizing the capital employed and managing consolidated shareholders’ equity, which consists of paid-up
share capital, treasury shares, reserves, and translationdifferences. As at December 31, 2010, shareholders’­equity stood at CHF 729.7 million. The capital management objectives are to ensure that the Group remains
a going concern, to preserve its financial flexibility forinvestments and to achieve a risk-adjusted return on
equity for investors.

Changes in economic condition may require adjustments to the Group’s shareholders’ equity. These adjustments can take the form of dividend payments,
capital repayments or increases, and share buybacks.
In connection with the US private placement and certain bank facilities, the Group has a covenant that defines the minimum consolidated shareholders’ equity
as CHF 535.5 million.
38 Events after the balance sheet date
There are no events to report after the balance sheet
date.

Forbo Annual Report 2010 – Consolidated financial statements 137

138 Forbo Annual Report 2010 – Consolidated financial statements

Group companies(as at December 31, 2010)

Currency

Share capital

Equityinterest

AUD
AUD

1,400,000
6,000,000

100%
100%

S

ViennaViennaEUR
EUR

73,000330,000

100%
100%

S

Belgium
Forbo Adhesives België BVBAForbo Flooring N.V.

DendermondeGroot-Bijgaarden

EUR
EUR

61,000250,000

100%
100%

BrazilForbo Pisos Ltda.
Forbo Siegling Brasil Ltda.

São PauloSão Paulo

BRL
BRL

10,0007,008,746

100%
50%

CanadaForbo Adhesives (Canada) Ltd.
Forbo Flooring Inc.
Forbo Siegling Ltd.

Saint John
TorontoToronto

CAD
CAD
CAD

3,500,157
500,000
501,000

100%
100%
100%

Chile
Forbo Siegling Chile S.A.

Santiago

CLP

335,631,092

50%

Czech Republic
Bonar Floors s.r.o.
Forbo Siegling Ceska republika s.r.o.
Forbo s.r.o.

PragueLiberec
Prague

CZK
CZK
CZK

200,000
100,000
500,000

100%
100%
100%

S

Denmark
Forbo Flooring A/SForbo Siegling Danmark A/S

Glostrup
Brøndby

DKK
DKK

500,000
1,100,000

100%
100%

S

Finland
Forbo Linoleum OY
Oy Forbo Adhesives Nordic Ab

Helsinki
Esbo

EUR
EUR

33,63825,280100%
100%

FranceForbo Adhesives France S.A.S.
Forbo Château Renault S.A.S.
Forbo Participations S.A.S.
Forbo Reims SNC
Forbo Sarlino S.A.S.
Forbo Siegling France S.A.S.

SurbourgChâteau-Renault
Reims
Reims
Reims
Lomme

EUR
EUR
EUR
EUR
EUR
EUR

1,440,000
8,000,000
43,490,386
3,879,810
6,400,000
819,000

100%
100%
100%
100%
100%
100%

Company

Registered office

Australia
Forbo Floorcoverings Pty. Ltd.
Forbo Siegling Pty. Ltd.

Wetherill Park, NSW
Wetherill Park, NSW

Austria
Forbo Flooring Austria GmbH
Forbo Siegling Austria Ges.m.b.H.

D

N

N

D

Flooring Bonding
Systems Systems

Movement
Systems

Holding/Services

S

S

S
S

S
MS

MS
S
S

MS

S
S

S

MS

H
MS

MS
MS
H
MS
S
S

Forbo Annual Report 2010 – Consolidated financial statements 139

Currency

Share capital

Equityinterest

EUR
EUR
EUR
EUR
EUR
EUR
EUR

5,120,000
15,400,000
2,050,000
500,000
10,230,000
1,023,000
100,000

100%
100%
100%
100%
100%
100%
100%

Kallithea (Athens)EUR

927,656

100%

Hong Kong
Bonar Floors Ltd.
Forbo Holding (Hong Kong) Ltd.
Forbo Siegling Hong Kong Ltd.

Hong Kong
Hong Kong
Hong Kong

HKD
HKD
HKD

123,548,000
1,000,000
1,000,000

100%
100%
100%

Hungary
Forbo Adhesives Hungary Kft.
Forbo Siegling Hungária Kft.

Budapest
Budaörs

HUF
HUF

3,000,000
30,000,000

100%
100%

Ireland
Forbo Adhesives Ireland Ltd.
Forbo Ireland Ltd.
Forbo-Siegling (Ireland) Ltd.

DublinDublinDublin

EUR
EUR
EUR

2,520
127,000
25,395

100%
100%
100%

S

Pianezze (Vicenza)
Segrate (Milano)
Paderno Dugnano(Milano)

EUR
EUR
EUR

416,000
60,000120,000

100%
100%
100%

S

Japan
Forbo Siegling Japan Ltd.

Tokyo

JPY

330,000,000

100%

Jersey, C.I.
Forbo Invest Ltd.

St. Helier

GBP

25,000100%

Malaysia
Forbo Siegling SDN. BHD.

Johor Bahru

MYR

2,500,002

100%

MexicoForbo Siegling, S.A. de C.V.

Tlalnepantla

MXN

24,676,404

100%

Company

Registered office

Germany
Forbo Adhesives Deutschland GmbH
Forbo Beteiligungen GmbH
Forbo Erfurt GmbH
Forbo Flooring GmbH
Forbo Siegling GmbHPaul Heinicke GmbH & Co. KG
Realbelt GmbH

Pirmasens
LörrachErfurtPaderborn
Hanover
Pirmasens
Lörrach

GreeceForbo Adhesives Greece S.A.I.C

Italy
Forbo Adhesives Italia S.p.A.
Forbo Resilienti S.r.l.
Forbo Siegling Italia S.p.A.

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2010
D Direct participation of Forbo Holding Ltd

D

D

D

Flooring Bonding
Systems Systems

MS

Movement
Systems

Holding/Services

H
MS
S
MS
H
S

MS

S
H
S

S
S

S
H

MS
S

MS

H

S

S

MS

140 Forbo Annual Report 2010 – Consolidated financial statements

Currency

Share capital

Equityinterest

GenderenZaanstad
Krommenie
Krommenie
Krommenie
Coevorden
Spankeren

EUR
EUR
EUR
EUR
EUR
EUR
EUR

27,600454,000
11,350,000
9,700,000
13,500,000
3,630,241
113,445

100%
100%
100%
100%
100%
100%
100%

New Zealand
Forbo Siegling Ltd.

Auckland

NZD

650,000

100%

NorwayForbo Flooring AS

Asker

NOK

1,000,000

100%

People’s Republic of China
Forbo Adhesives (Guangzhou) Co., Ltd.
Forbo Adhesives (Shanghai) Co., Ltd.
Forbo Shanghai Co., Ltd.
Forbo Siegling (Shenyang) Belting Co., Ltd.

Guangzhou
Shanghai
Shanghai
Shenyang

USD
USD
CHF
USD

8,000,000
1,000,000
4,000,000
16,221,000

100%
100%
100%
100%

PolandForbo Adhesives Poland Sp. z o.o.

Warsaw

PLN

50,000100%

Leça da Palmeira(Porto)EUR74,850100%

Siegling (Portugal) Lda.

Gemunde (Porto)

EUR

500,000

100%

Romania
Forbo Adhesives Romania S.R.L.
Forbo Siegling Romania S.R.L.

OradeaBucharest

RON
RON

7,077
38,000100%
100%

RussiaOOO ‘Forbo Flooring‘
OOO ‘Forbo Kaluga‘
OOO ‘Forbo Stroitech‘
ZAO ‘Forbo Siegling‘

Moscow
Moscow
Stary Oskol
St. Petersburg

RUB
RUB
RUB
RUB

500,000
158,313,780
144,181,000
400,000

100%
100%
100%
100%

S
MS

Slovakia
Bonar Floors, s.r.o.
Forbo Siegling s.r.o.

Bratislava
Malacky

SKK
EUR

200,000
6,639

100%
100%

S

Mos (Pontevedra)
Barcelona
Montcada i Reixac(Barcelona)

EUR
EUR
EUR

6,015,006
60,101
1,532,550

100%
100%
100%

Company

Registered office

Netherlands
Forbo Adhesives Nederland B.V.
Forbo Eurocol B.V.
Forbo Flooring B.V.
Forbo Flooring Coral N.V.
Forbo NL Holding B.V.
Forbo-Novilon B.V.
Forbo Siegling Nederland B.V.

Portugal
Forbo-Revestimentos, S.A.

Spain
Forbo Adhesives Spain, S.L.
Forbo Pavimentos, S.A.
Forbo Siegling Iberica, S.A.

D

Flooring Bonding
Systems Systems

MS
MS

Movement
Systems

Holding/Services

MS
MS
H
MS
S

S

S

MS
MS
S

MS
MS

S

S
H

S
S

MS
S

MS

MS
S
S

Forbo Annual Report 2010 – Consolidated financial statements 141

Company

Registered office

SwedenForbo Adhesives Sweden AB
Forbo Flooring AB
Forbo Project Vinyl AB
Forbo Siegling Svenska AB

Gothenburg
Gothenburg
GothenburgKållered(Gothenburg)

D
D

Currency

Share capital

Equityinterest

SEK
SEK
SEK
SEK

100,000
8,000,000
50,000,000
1,000,000

100%
100%
100%
100%

CHF
CHF
CHF
CHF
CHF
CHF

3,375,000
20,000100,000
10,000,000
100,000
100,000

33%
25%
100%
100%
100%
100%

Switzerland
Enia Carpet Group AG
FJK Carpet D GmbH in Liquidation
Forbo Financial Services AG
Forbo Finanz AG
Forbo-Giubiasco SA
Forbo International SA

EnnendaEnnendaBaar
Baar
Giubiasco
Baar

TurkeyForbo Adhesives Ticaret Limited Sirketi

Istanbul

TRY725,000

100%

United Kingdom
Bonar Tiles Holdings Ltd.
Bonar Tiles Ltd.
Forbo Adhesives UK Ltd.
Forbo Flooring UK Ltd.
Forbo-Nairn Ltd.
Forbo Siegling (UK) Ltd.
Forbo UK Ltd.
Westbond Ltd.

Derbyshire
Derbyshire
Chatteris
Kirkcaldy
LondonDunkinfield
LondonDerbyshire

GBP
GBP
GBP
GBP
GBP
GBP
GBP
GBP

1,000
14,500,002
100
4,000,000
8,000,000
50,77449,500,000
400,000

100%
100%
100%
100%
100%
100%
100%
100%

USA
Forbo Adhesives, LLC
Forbo America Inc.
Forbo America Services Inc.
Forbo Flooring, Inc.
Forbo Siegling, LLC

Wilmington, DE
Wilmington, DE
Wilmington, DE
Wilmington, DE
Wilmington, DE

USD
USD
USD
USD
USD

5,000,100
19,957,259
50,0003,517,000
15,455,000

100%
100%
100%
100%
100%

S Sales
MS Manufacturing and Sales
H Holding/Services
N Not consolidated as at December 31, 2010
D Direct participation of Forbo Holding Ltd

N
N
D
D
D
D

D

D

Flooring Bonding
Systems Systems

Movement
Systems

Holding/Services

H
S
S
S

H
H
H
H
MS
MS

MS

H

S

H
H
MS
MS

H
H
S
H
H

MS
H
H
S
MS

142 Forbo Annual Report 2010 – Consolidated financial statements

Report of the statutory auditor

Report of the statutory auditor to the General Meetingof Forbo Holding Ltd, Baar
Report of the statutory auditor on the consolidated financial statements
As statutory auditor, we have audited the consolidated financial statements of Forbo Holding Ltd, which ­comprisethe consolidated balance sheet, consolidated income statement, comprehensive income statement, consolidated shareholder’s equity, consolidated cash flow statement and notes (pages 84 to 141), for the year ended
December 31, 2010.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS) and the requirements of Swisslaw. This responsibility includes designing, implementing, and maintaining an internal control system relevant to
the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying­appropriate accounting policies and making accounting estimates that are reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We
conducted our audit in accordance with Swiss law and Swiss Auditing Standards as well as the International
Standards on Auditing. Those standards require that we plan and perform the audit to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
consolidated financial statements. The procedures selected depend on the auditor’s judgment, including theassessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud
or error. In making those risk assessments, the auditor considers the internal control system relevant to the ­entity’s
preparation and fair presentation of the consolidated financial statements in order to design audit proceduresthat are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the entity’s internal control system. An audit also includes evaluating the appropriateness of the accounting
policies used and the reasonableness of accounting estimates made, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the consolidated financial statements for the year ended December 31, 2010 give a true and fairview of the financial position, the results of operations and the cash flows in accordance with the International
Financial Reporting Standards (IFRS) and comply with Swiss law.

Forbo Annual Report 2010 – Consolidated financial statements 143

Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) andindependence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an­internal control system exists which has been designed for the preparation of consolidated financial statements
according to the instructions of the Board of Directors.
We recommend that the consolidated financial statements submitted to you be approved.
PricewaterhouseCoopers AG

Daniel Ketterer
Audit expert
Auditor in charge

Zurich, March 9, 2011

Reto Tognina
Audit expert

144 Forbo Annual Report 2010 – Consolidated financial statements

Consolidated income statements
2006 – 2010
CHF m
Net sales
Cost of goods sold
Gross profit
Development costs
Marketing and distribution costs
Administrative costs
Other operating expenses
Other operating profit
Operating profit
Financial income
Financial expenses
Group profit before taxes
Income taxes
Group profit for the year

2010

2009

2008

2007

2006

1,789.7– 1,201.1
588.6– 27.3– 250.7– 123.9– 14.0
13.2
185.9
44.4
– 15.5214.8– 51.5163.3

1,782.4– 1,200.4
582.0– 27.9– 270.0– 128.3– 46.4
12.4
121.8
4.3
– 24.7101.4– 25.376.1

1,918.7– 1,325.0
593.7– 29.9– 282.7– 137.9– 50.0
23.9
117.1
9.2
– 104.9
21.4
– 5.4
16.0

2,004.0– 1,331.9
672.1– 31.6– 325.9– 137.7– 33.9
19.4
162.4
11.7
– 19.3154.8– 44.1110.7

1,879.5– 1,273.4
606.1– 31.3– 300.6– 131.9– 50.7
18.0
109.6
7.6
– 21.096.2– 35.061.2

Forbo Annual Report 2010 – Consolidated financial statements 145

Consolidated balance sheets
2006 – 2010
Assets
CHF m
Non-current assets
Property, plant, and equipment
Intangible assets
Deferred tax assets
Employee benefit assets
Investments in associates and other non-current assets
Current assets
Inventories
Trade receivables
Other receivables
Prepaid expenses and deferred charges
Marketable securities
Cash and cash equivalents
Total assets

Shareholders’ equity and liabilities
CHF m
Shareholders’ equity
Share capital
Treasury shares
Reserves and retained earnings
Non-current liabilities
Non-current financial debt
Employee benefit obligations
Non-current provisions
Deferred tax liabilities
Current liabilities
Trade payables
Current provisions and accrued expenses
Current financial debt
Current tax liabilities
Other current liabilities
Total liabilities
Total shareholders’ equity and liabilities

31.12.2010

31.12.2009

31.12.2008

31.12.2007

31.12.2006

743.9
450.2
270.4
17.6
0.0
5.7
750.3
260.9
220.8
28.4
21.4
47.4
171.4
1,494.2

885.7
549.9
309.1
20.5
0.0
6.2
859.7
261.0
237.1
33.1
30.1
100.2
198.2
1,745.4

928.7
586.3
311.7
28.8
0.0
1.9
909.1
298.3
265.8
32.2
23.6
73.6
215.6
1,837.8

601.7
423.7
151.9
20.7
3.1
2.3
803.5
286.3
287.7
29.5
22.5
0.0
177.5
1,405.2

593.4
421.5
149.2
20.5
0.0
2.2
905.2
266.7
293.7
25.1
25.6
0.0
294.1
1,498.6

31.12.2010

31.12.2009

31.12.2008

31.12.2007

31.12.2006

729.7
0.3
– 0.1
729.5
360.8
196.5
74.7
35.3
54.3
403.7
135.7
140.3
65.9
31.0
30.8
764.5
1,494.2

679.6
0.3
– 0.1
679.4
720.2
550.1
68.6
38.8
62.7
345.6
123.3
158.2
3.4
24.7
36.0
1,065.8
1,745.4

584.4
10.9
– 2.0
575.5
676.6
512.4
58.6
37.0
68.6
576.8
144.5
149.0
181.3
25.3
76.7
1,253.4
1,837.8

713.1
38.0
– 4.0
679.1
254.7
194.9
0.0
42.3
17.5
437.4
138.1
167.6
24.2
29.8
77.7
692.1
1,405.2

638.6
54.3
– 3.5
587.8
304.4
209.1
45.8
41.7
7.8
555.6
131.5
169.3
128.3
21.8
104.7
860.0
1,498.6

Financial Report

Financial statements for Forbo Holding Ltd
Income statement
Balance sheet
Notes to the financial statements
Proposal for appropriation of available earnings
Report of the statutory auditor

147
148
149
150
157
158

148 Forbo Annual Report 2010 – Annual statements for the holding company

Income statementfor Forbo Holding Ltd
IncomeCHF
Financial income:From investments in and advances to Group companies
From securities and short-term investments
Other income
Total income

Expenses
CHF
Administrative expenses
Financial expenses
Taxes
Total expenses
Net profit for the year

2010

2009

53,765,439
93,546,926
678,740
147,991,105

42,699,290
56,292,117
9,801
99,001,208

2010

2009

3,750,075
30,391,394
15,151
34,156,620
113,834,485

4,719,483
14,463,396
15,00019,197,879
79,803,329

Note

1
2

Note

3
4

Forbo Annual Report 2010 – Annual statements for the holding company 149

Balance sheet for Forbo Holding Ltd(before appropriation ofavailable earnings)
AssetsCHF
Non-current assets
Shareholdings in Group companies
Advances to Group companies
Current assets
Other receivables from Group companies
Other receivables from third parties
Accrued income and prepaid expenses
Marketable securities
Cash and cash equivalents
Total assets

Shareholders’ equity and liabilities
CHF
Shareholders’ equity
Share capital
Statutory capital contribution reserves:
Thereof general reserves
Thereof reserves for treasury shares
Other statutory reserves:
Thereof general reserves
Thereof reserves for treasury shares
Other reserves
Available earnings:
Retained earnings
Net profit
Liabilities
Bond
Non-current bank debt
Advances from Group companies
Other liabilities to Group companies
Current liabilities to third parties
Accrued expenses
Total shareholders’ equity and liabilities

31.12.2010

31.12.2009

590,903,226
442,636,053
148,267,173
200,531,148
2,199,993
234,447
134,569
187,693,160
10,268,979
791,434,374

658,521,470
458,036,053
200,485,417
151,559,649
5,669,249
23,673708,985
130,574,960
14,582,782
810,081,11931.12.2010

31.12.2009

9583,389,530
271,315

483,396,397
271,31512
11

129,088,651
55,610,149

0192,318,836

12
11

15,600,000
101,835,830
38,936,338

15,600,000
0130,843,086

128,212,762
113,834,485
208,044,844
150,000,000
013,991,600
40,745,247
17,8303,290,167
791,434,374

64,559,831
79,803,329
326,684,722
150,000,000
130,350,000
34,174,572
8,693,222
17,844
3,449,084
810,081,119

Note

5
6

7
8

Note

13
14

150 Forbo Annual Report 2010 – Annual statements for the holding company

Notes to the financial statements
for Forbo Holding Ltd
1 Financial income from investments in andadvances to Group companies
Income from investments in and advances to Group
companies amounts to CHF 53.8 million (previous year
CHF 42.7 million) and consists of interest and dividend
income.
2 Financial income from securities andshort-term investments
This item totaling CHF 93.5 million (2009: CHF 56.3 million) includes investment income, income from securities transactions and derivatives, and interest income.

3 Administrative expenses
Administrative expenses fell against the previous year
by CHF 1.0 million, totaling CHF 3.8 million.
4 Financial expenses
This item relates mainly to losses on foreign exchange
accounts, interest costs for current and non-current
bank debt, and advances from Group companies.
5 Investments in Group companies
As at December 31, 2010, Forbo Holding Ltd held thefollowing direct investments:

Investments in Group companies
Currency

Share capitalin 1,000

Equityinterest

Manufacturing and Sales
Holding/Services
Holding/Services
Services
Holding/Services
Sales
Sales
Sales
Manufacturing and Sales
Services,
Manufacturing and Sales

GBP
USD
EUR
CHF
CHF
AUD
SEK
NOK
CHF
CHF

0.1
19,957
15,400100
10,000
1,400
8,000
1,000
100
100

100%
100%
100%
100%
100%
100%
100%
100%
100%
100%

Services
Holding/Services
Manufacturing and Sales
Services

GBP
EUR
SEK
EUR

25
43,49050,000
1,023

50%
100%
100%
72%

Company

Registered office

Activity

Forbo Adhesives UK Ltd.
Forbo America Inc.
Forbo Beteiligungen GmbH
Forbo Financial Services AG
Forbo Finanz AG
Forbo Floorcoverings Pty. Ltd
Forbo Flooring AB
Forbo Flooring AS
Forbo-Giubiasco SA
Forbo International SA

GB-Chatteris
US-Wilmington, DE
DE-Lörrach
CH-Baar
CH-Baar
AU-Wetherill Park, NSW
SE-Gothenburg
NO-Asker
CH-Giubiasco
CH-BaarForbo Invest Ltd.
Forbo Participations S.A.S
Forbo Project Vinyl AB
Paul Heinicke GmbH & Co. KG

CI-St. Helier
FR-Reims
SE-Gothenburg
DE-Pirmasens

6 Advances to Group companies

8 Cash and cash equivalents

Advances to Group companies are denominated in
Swiss francs and foreign currencies. The net decreaseyear-on-year was CHF 52.2 million.

This item consists of bank deposits and cash equivalents with initial maturities of three months or less.

7 Marketable securities
The item ‘Marketable securities’ includes treasury
shares in Forbo Holding Ltd. This balance sheet item
was valued at fair value as at December 31, 2010.

Forbo Annual Report 2010 – Annual statements for the holding company 151

9 Share capitalAt year-end 2010, the company’s share capital totaled
CHF 271,315, divided into 2,713,152 registered shareswith a par value of CHF 0.10 each. 21,419 registeredshares without voting or dividend rights are at the disposal of the Board of Directors. Consequently, 2,691,733
registered shares were eligible for dividend payments
in 2010. The shares are listed on the SIX Swiss Exchange
under security number 354,151.
10 Conditional capital
Originally, conditional capital of CHF 8,500,000 for the
exercise of shareholder options and warrants in connection with a bond issue was created by a resolutionof the Ordinary General Meeting held on April 27,
1994. Following the exercise of options in 1994, 1995,
and 1997 and reductions in the par value by CHF 22
Treasury shares
As at January 1, 2010
Additions
Disposals
As at December 31, 2010

per share in 2003, CHF 8 per share in 2004, CHF 6 pershare in 2007, CHF 10 per share in 2008, and CHF 3.90
per share in 2009, the conditional capital on December
31, 2010, remained unchanged against the previous
year at CHF 16,645.
11 Reserve for treasury shares
The ‘Reserve for treasury shares’ amounting to CHF
101.8 million and the capital contribution reserves
amounting to CHF 55.6 million relate to treasury shares
held at year-end by Forbo Holding Ltd and its subsidiaries valued at an amortized cost of CHF 157.4 million(2009: CHF 192.3 million). The treasury shares developed as follows during the period under review:

Cost
CHF
192,318,836
7,594,050– 42,466,907
157,445,979

Number ofregistered shares
446,559
14,514– 87,083
373,990

12 General reserves

14 Non-current bank debt

General reserves totaled CHF 144.7 million (2009: CHF
15.6 million) and consist of general reserves (CHF 15.6
million) and general capital contribution reserves(CHF 129.1 million). The statutory capital contribution
reserves amount to CHF 184.7 million in total and consist of general reserves (CHF 129.1 million) and reserves
for treasury shares (CHF 55.6 million).

As at December 31, 2010, Forbo had no non-current
bank debt.

13 Bond
Forbo Holding Ltd issued a CHF 150.0 million fouryear bond on July 6, 2009 (maturity: July 31, 2013). The
bond has a coupon of 4 1/8%, and the issue was leadmanaged by Credit Suisse. It has been traded on the
SIX Swiss Exchange since July 20, 2009.

15 Contingent liabilities
Guarantees and letters of support to third parties infavor of Group companies amounted to CHF 116.3 million at year-end (2009: 272.1 million), of which CHF
110.0 million (2009: CHF 270.7 million) was utilized.
The main factor here was a surety in connection withutilized bank facilities and guarantees to investors andbanks in connection with funds raised by a Group
company in the form of a US private placement (CHF
46.9 million).

152 Forbo Annual Report 2010 – Annual statements for the holding company

16 Significant shareholders
According to the information available to the Boardof Directors, the following shareholders or groups ofshareholders with restricted voting rights constituted
significant shareholders in the company pursuant toarticle 663c of the Swiss Code of Obligations as at thereporting date:

Michael Pieper, Hergiswil, and Artemis Beteiligungen I AG, Hergiswil
Forbo Holding Ltd, Baar, together with its two subsidiaries
Forbo International SA, Baar, and Forbo Finanz AG, Baar
This E. Schneider, Wilen b. Wollerau

Number of shares
681,466
373,990

As percentage
25.12
13.78

162,054

5.97

Forbo Annual Report 2010 – Annual statements for the holding company 153

17 Disclosure of compensation to the Boardof Directors and Executive Board pursuant
to articles 663bbis and 663c of the Swiss Codeof Obligations
Compensation
For the business year 20101)
Base compensation

Variablecompensation

SharesCash, shares,
options

Cash
Name and function

Dr. Albert Gnägi, Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, member
Vincent Studer, member
Non-executive members of the Board of Directors2)
This E. Schneider, Delegateof the Board of Directors and CEO3)4)
Board of Directors
Executive Board5)6)

Othercompensation

Total

CHF

Number

CHF

CHF

CHF

CHF

207,155
66,12072,131
74,915420,321150,000

311
99
108
113
631
9,479

137,845
43,88047,86950,085
279,679
2,559,330

0
0
0
0
0
0

26,25011,723
12,425
7,154
57,552
370,507371,250
121,723
132,425
132,154757,552
3,079,837

570,3212,232,499

10,11002,839,009
37,50002,516,325

428,059805,057

3,837,389
5,591,381

1) The amounts shown in the table are based on valuation models
used and disclosed in the consolidated financial statements. The
table therefore shows all compensation issued in the year underreview, including compensation for which the payment date or
definitive legal acquisition will occur after December 31, 2010.
2) The non-executive members of the Board of Directors receive a
fixed fee, the amount of which is determined according to whether the member is Chairman or a simple member of the Board or amember of the AFC or HRC. The cash compensation is shown asa gross amount before deduction of social security contributions.
40% of the compensation is paid to the members in the form ofshares in Forbo Holding Ltd. The shares are valued at fair valueon the grant date. The total compensation for the non-executive
members of the Board of Directors also includes a lump sum for
expenses plus employer contributions to AHV/ALV (old-age andunemployment insurance). These are reported in the column‘Other compensation’.
3) The compensation paid to the Delegate of the Board of Directors and CEO is disclosed separately and subsumed under totalcompensation to the Board of Directors. It is not possible to clearly
divide the total compensation paid for the two functions.
4) In fall 2005, the Delegate of the Board of Directors and CEO agreed
that the bulk of his compensation for 2005 and for the following
five years (from 2006 up to and including 2010) would be paid
largely in shares. In lieu of salary payments, for the contractual period of employment until December 31, 2010, he was allocated47,395 shares at fair value on the date on which the agreement
was signed, i.e. CHF 270 each, for the entire five-year term of theagreement (2006 to 2010). The shares were valued at fair value on
the grant date. These shares are vested until December 31, 2010
and freely available only as of January 1, 2011. In addition to theshare package, the Delegate of the Board of Directors and CEO
draws an annual sum of CHF 150,000, which is used to make employee contributions to the pension plan and for social security
contributions. The share package and the cash remuneration are
deemed to cover all compensations such as bonuses, inflation, options, etc. The corresponding personnel expenses are charged tothe income statement over the entire contractual period on a pro
rata basis (see note 25 ‘Stock option plan’ to the consolidated financial statements). The Delegate of the Board of Directors and CEO
does not benefit from the Management Investment Plan (MIP) or

the share-based payments for the non-executive Board members.
Total compensation for the Delegate of the Board of Directors and
CEO for 2010 came to CHF 3,079,837. This figure included private
use of a company car, employer contributions to the pension planand to the AHV/ALV (old-age and unemployment insurance), plus
accident and daily sickness benefits insurance. These items areshown in the column ‘Other compensation’. With effect from January 2009, the employment contract with the Delegate of the Boardof Directors and CEO was extended to encompass the period fromJanuary 1, 2011 to April 30, 2013. Compensation will again be paid
mainly in shares. The modalities are very similar to the provisionsof the first contract. The 29,775 shares are vested until December
31, 2013. The extension of this employment contract has not been
included in the table above and will appear on a pro rata basis only
as of January 1, 2011.
5) The total compensation paid to the members of the Executive
Board (excluding the Delegate of the Board of Directors and CEO)came to CHF 5,591,381 in 2010. It comprised a gross basic salary
and a performance-related bonus, which is set in March of thesubsequent year and dependent on achieving individual and theGroup targets. The performance-related component is paid inaccordance with the rules of the Management Investment Plan
(MIP) (see note 25 ‘Stock option plan’ to the consolidated financial
statements). The total compensation paid to the members of the
Executive Board also includes private use of a company car, employer contributions to the pension plan and to AHV/ALV (old-age
and unemployment insurance) plus accident and daily sickness
benefits insurance, which are shown separately in the column‘Other compensation’.
6) Following the expansion of the Executive Board as of April 1, 2010,
these figures include the compensation paid to an additional
member of the Executive Board compared to the previous year.

154 Forbo Annual Report 2010 – Annual statements for the holding company

Compensation
For the business year 20091)
Base compensation

Variablecompensation

SharesCash, shares,
options

Cash
Name and function

Dr. Albert Gnägi, Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, member
Dr. Rudolf Huber, member6)
Vincent Studer, member6)
Non-executive members of the Board of Directors2)
This E. Schneider, Delegateof the Board of Directors and CEO3)4)
Board of Directors
Executive Board5)

1) The amounts shown in the table are based on valuation models
used and disclosed in the consolidated financial statements. The
table therefore discloses all compensation that has been granted
for 2009, including compensation for which the payment date or
definitive legal acquisition occurs after December 31, 2009.
2) The non-executive members of the Board of Directors receive a
fixed fee, the amount of which is determined according to whether the member is Chairman or a simple member of the Board or heis a member of the AFC or HRC. The cash compensation is shown
as a gross amount before deduction of social insurance contri­
butions. 40% of the compensation is paid to the members in theform of shares in Forbo Holding Ltd. The shares are valued at fairvalue on the grant date. The total compensation to the non-executive members of the Board of Directors also includes a lump sum
for expenses plus employer contributions to AHV/ALV (old-age
and unemployment insurance). These are reported in the column‘Other compensation’.
3) The compensation to the Delegate of the Board of Directors and
CEO is disclosed separately and subsumed under total compensation to the Board of Directors. It is not possible to clearly divide thetotal compensation paid for the two functions.
4) In fall 2005, the Delegate of the Board of Directors and CEO agreed
that the bulk of his compensation for 2005 and for the following
five years (from 2006 up to and including 2010) would be paid
largely in shares. In lieu of salary payments, for the contractual­period of employment until December 31, 2010, he was allocated47,395 shares at fair value on the date on which the agreement
was signed, i.e. CHF 270 each, for the entire five-year term of theagreement (2006 to 2010). The shares were valued at fair value on
the grant date. These shares are vested until December 31, 2010
and freely available only as of January 1, 2011. Should the employment be terminated before that date, the shares must be returnedto the company on a pro rata basis. In addition to the share package, the Delegate of the Board of Directors and CEO draws an annual sum of CHF 150,000, which is used to make employee contributions to the pension plan and for social security payments. The
share package and the cash remuneration are deemed to cover
all compensations such as bonuses, inflation, options, etc. aresettled. The corresponding personnel expenses are charged to theincome statement over the entire contractual period on a pro rata
basis (see note 25 ‘Stock option plan’ to the consolidated financial

Other
compensation

Total

CHF

Number

CHF

CHF

CHF

CHF

206,995
66,09071,90841,66750,312436,972
150,000

594
189
207
0
145
1,135
9,479

138,004
43,91048,092033,688263,6942,559,330

0
0
0
0
0
0
0

26,248
11,722
12,422
4,459
4,822
59,673373,165

371,247
121,722
132,422
46,12688,822
760,339
3,082,495

586,972
1,950,000

10,61402,823,024
002,047,500

432,838
690,909

3,842,834
4,688,409

statements). The Delegate of the Board of Directors and CEO does
not benefit from the Management Investment Plan (MIP) or theshare-based payment for the non-executive Board members. Total
compensation for the Delegate of the Board of Directors and CEO
for 2009 came to CHF 3,082,495. This figure included private use of
a company car, employer contributions to the pension fund and to
AHV/ALV (old-age and unemployment insurance), plus accident
and daily sickness benefits insurance. These items are shown inthe column ‘Other compensation’. With effect from January 2009,
the employment contract with the Delegate of the Board of Directors and CEO was extended to encompass the period from January 1, 2011, to April 30, 2013. Compensation will again be paid
mainly in shares. The modalities are very similar to the provisionsof the first contract. The 29,775 shares are vested until December
31, 2013. The extension of this employment contract has not been
included in the table above and will apear on a pro rata basis only
as of January 1, 2011.
5) The total compensation paid to the members of the Executive
Board (excluding the Delegate of the Board of Directors andCEO) was CHF 4,688,409 in 2009. It comprised a gross basic salary and a performance-related bonus, which is set in March of thesubsequent year and is dependent on achieving individual andGroup targets. The performance-related component is paid inaccordance with the rules of the Management Investment Plan
(MIP) (see note 25 ‘Stock option plan’ to the consolidated financial statements). The total compensation paid to the members of
the Executive Board also includes private use of a company car,employer contributions to the pension fund and to the AHV/ALV(old-age and unemployment insurance), plus accident and daily
sickness benefits insurance, which are shown separately in thecolumn ‘Other compensation’.
6) At the Ordinary General Meeting on April 24, 2009, Vincent Studer
was elected as a new member of the Board of Directors for a threeyear term of office in a single vote. He replaced Dr. Rudolf Huber.

Forbo Annual Report 2010 – Annual statements for the holding company 155

Advances and loans
As at December 31, 2010, no advances or loans tomembers of the Board of Directors or members of the
Executive Board were outstanding.

Investments in Group companies
In 2010As at December 31, 2010, the individual members of
the Board of Directors and the Executive Board (including related parties) held the following number ofshares in Forbo Holding Ltd:

Investments 2010
Shares

Options1)5)Tradable
options

9,041
681,466682
358
691,547

Series 2010
1:12)
0
0
0
0
0

Series 2009
1:12)
0
0
0
0
0

Series 2008
1:12)
0
0
0
0
0

Series 2007
1:12)
0
0
0
0
0

Series 2006
1:12)
0
0
0
0
0

This E. Schneider, Delegateof the Board of Directors and CEO3)4)

162,054

0

0

0

0

0

0

Board of Directors
Matthias P. Huenerwadel, Executive
Vice President Movement Systems

853,601
1,328

0
565

0
1,496

0
1,157

0
1,204

0
500

0
0

Tom Kaiser, Chief Operating Officer6)
Daniel Keist, Head Corporate Center
Jörg Riboni, Chief Financial Officer
Michel Riva, Executive
Vice President Bonding Systems

1,825
1,050
3,653
663

1,058
988
1,143
706

2,179
2,034
1,220
99

1,073
783
1,948
485

1,258
0
2,091
697

0
0
0
0

0
0
0
0

0

0

0

0

0

0

0

8,519

4,460

7,028

5,446

5,250

500

0

Name and function
Dr. Albert Gnägi, Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, member
Vincent Studer, member
Non-executive members of theBoard of Directors

Jens Schneider, Executive
Vice President Flooring Systems6)
Executive Board

1) The details of the options are described in note 25 ‘Stock option
plan’ to the consolidated financial statements.
2) Subscription ratio.
3) The number of shares reported includes the 47,395 shares vested
until year-end 2010. With effect from January 2009, the employment contract with the Delegate of the Board of Directors and
CEO was extended to encompass the period from January 1,
2011 to April 30, 2013. Compensation will again be paid mainly inshares. The modalities are very similar to the provisions of the firstcontract. The 29,775 shares are included in the amount shown andare vested until December 31, 2013.
4) The Delegate of the Board of Directors and CEO’s shareholdings
are disclosed separately and are included under the Board of­Directors total.

0
0
0
0
0

5) Since participation in the MIP is not limited to members of the
Executive Board, the number of outstanding options shown here
as at December 31, 2010 differs from the figures in note 25 ‘Stock
option plan’ to the consolidated financial statements.
6) The Board of Directors of Forbo Holding Ltd appointed Tom Kaiser
as Chief Operating Officer on April 1, 2010. He had been a memberof the Executive Board since 2004 and responsible for the Flooring
Systems division. Jens Schneider, who had been responsible forFinance and Administration at Flooring Systems since 2005, wasappointed his successor.

156 Forbo Annual Report 2010 – Annual statements for the holding company

In 2009
As at December 31, 2009, the individual members of
the Board of Directors and the Executive Board (in­cluding related parties) held the following number ofshares in Forbo Holding Ltd:
Investments 2009
Shares

Options1)5)Tradable
options

18,610853,367574
245
872,796

Series 2009
1:12)
0
0
0
0
0

Series 2008
1:12)
0
0
0
0
0

Series 2007
1:12)
0
0
0
0
0

Series 2006
1:12)
0
0
0
0
0

Series 2005
1:12)
0
0
0
0
0

This E. Schneider, Delegateof the Board of Directors and CEO3)4)

173,467

0

0

0

0

2,100

0

Board of Directors
Matthias P. Huenerwadel, Executive
Vice President Movement Systems

1,046,263
1,212

0
1,496

0
1,157

0
1,204

0
1,385

2,100
0

0
0

Tom Kaiser, Executive
Vice President Flooring Systems

1,608

2,179

1,073

1,258

2,380

0

0

Daniel Keist, Head Corporate Center
Jörg Riboni, Chief Financial Officer
Michel Riva, Executive
Vice President Bonding Systems

847
4,635
518

2,034
1,220
99

783
1,948
485

0
2,091
697

0
1,685
844

0
0
550

0
0
0

Executive Board

8,820

7,028

5,446

5,250

6,294

550

0

Name and function
Dr. Albert Gnägi, Chairman
Michael Pieper, Vice Chairman
Dr. Peter Altorfer, member
Vincent Studer, member
Non-executive members of theBoard of Directors

1) The details of the options are described in note 25 ‘Stock option
plan’ to the consolidated financial statements.
2) Subscription ratio.

4) The Delegate of the Board of Directors and CEO’s shareholdigs aredisclosed separately and are included under the Board of Directors
total.

3) The number of shares reported includes the 47,395 vested shares.
With effect from January 2009, the employment contract with
the Delegate of the Board of Directors and CEO was extended
to ­encompass the period from January 1, 2011 to April 30, 2013.
Compensation will again be paid mainly in shares. The modalities
are very similar to the provisions of the first contract. The 29,775
shares are included in the amount shown and are vested until­December 31, 2013.

5) Since participation in the MIP is not limited to members of the
Executive Board, the number of outstanding options shown here
as at December 31, 2009 differs from the figures in note 25 ‘Stock
option plan’ to the consolidated financial statements.

18 Risk assessment

Code of Obligations, please ­refer to the comments innote 37 ‘Risk assessment and financial risk management’ to the consolidated financial statements, .

With respect to the risk management process conducted pursuant to article 663b, item 12 of the Swiss

0
0
0
0
0

Forbo Annual Report 2010 – Annual statements for the holding company 157

Proposal for appropriation of avail­able earnings of Forbo Holding Ltd
The Board of Directors proposes to the Ordinary­General Meeting that the available retained earnings,
consisting of:

CHF
Net profit
Retained earnings
Release of general capital contribution reserves1)
Total at the Shareholder’s Meeting’s disposal

2010

2009

113,834,485
128,212,762
28,069,944
270,117,191

79,803,329
64,559,831
0
144,363,160

2010

2009

0
28,069,944
242,047,247
270,117,191

16,150,398
0
128,212,762
144,363,160

be appropriated as follows:

CHF
Dividend payment2)
Withholding tax-free distribution of CHF 12.00 per registered share3)
To be carried forward
Total at the Shareholder’s Meeting’s disposal

1) The definitive amount to be distributed depends on the amountof the withholding tax-free distribution as described hereafter infootnote 3).
2) The Ordinary General Meeting of April 23, 2010, voted to pay out adividend of CHF 6.00 per registered share.

3) At the Ordinary General Meeting of April 29, 2011, the Board of
Directors will propose a dividend payment of CHF 12.00 per­registered share out of the capital contribution reserves, with the
exception of the treasury shares held by Forbo Holding Ltd, forwhich no dividend is paid. The definitive amount may therefore
still change.

158 Forbo Annual Report 2010 – Annual statements for the holding company

Report of the statutory auditor

Report of the statutory auditor to the General Meetingof Forbo Holding Ltd, Baar
Report of the statutory auditor on the financial statements
As statutory auditor, we have audited the financial statements of Forbo Holding Ltd, which comprise the income
statement, balance sheet and notes (pages 148 to 156), for the year ended December 31, 2010.
Board of Directors’ responsibility
The Board of Directors is responsible for the preparation of the financial statements in accordance with the­requirements of Swiss law and the company’s articles of incorporation. This responsibility includes designing,
implementing, and maintaining an internal control system relevant to the preparation of financial statementsthat are free from material misstatement, whether due to fraud or error. The Board of Directors is further responsible for selecting and applying appropriate accounting policies and making accounting estimates that are­reasonable in the circumstances.
Auditor’s responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with Swiss law and Swiss Auditing Standards. Those standards require that we plan and­perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the­financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of
the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers the internal control system relevant to the entity’s preparation of the financial
statements in order to design audit procedures that are appropriate in the circumstances, but not for the purposeof expressing an opinion on the effectiveness of the entity’s internal control system. An audit also includes eval­uating the appropriateness of the accounting policies used and the reasonableness of accounting estimates
made, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
OpinionIn our opinion, the financial statements for the year ended December 31, 2010 comply with Swiss law and thecompany’s articles of incorporation.

Forbo Annual Report 2010 – Annual statements for the holding company 159

Report on other legal requirements
We confirm that we meet the legal requirements on licensing according to the Auditor Oversight Act (AOA) andindependence (article 728 CO and article 11 AOA) and that there are no circumstances incompatible with our
independence.
In accordance with article 728a paragraph 1 item 3 CO and Swiss Auditing Standard 890, we confirm that an­internal control system exists which has been designed for the preparation of financial statements according to
the instructions of the Board of Directors.
We further confirm that the proposed appropriation of available earnings complies with Swiss law and the­company’s articles of incorporation. We recommend that the financial statements submitted to you be approved.
PricewaterhouseCoopers AG

Daniel Ketterer
Audit expert
Auditor in charge

Zurich, March 9, 2011

Reto Tognina
Audit expert

ENTHU­
SIASM

Publisher: Forbo Holding Ltd, Baar/Concept and design: Hotz & Hotz Corporate Identity, Steinhausen/
Photos: Luxwerk, Zurich/Shutterstock page 38/Layout, lithography and printing: Neidhart + Schön AG, Zurich
Our Annual Report appears in German language and in English translation and can be downloaded fromour website www.forbo.com. The printed German version is authoritative.
All statements in this report that do not refer to historical facts are forward-looking statements which areno guarantee of future performance. They are based on assumptions and involve risks and uncertainties aswell as other factors beyond the control of the company.

SC2011030204 –Forbo Annual Report 2010

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Forbo Holding Ltd
Lindenstrasse 8
CH-6340 Baar
Forbo International SA
Lindenstrasse 8
CH-6340 Baar
Phone + 41 58 787 25 25
Fax + 41 58 787 20 25
info@forbo.com
www.forbo.com

connect.
Annual Report 2010

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