The Voith Group in Figures

Annual Report 2008/2009

Annual Report 2008/2009

2008/09

2007/08

Orders received

4 958

6 092

Sales

5 083

4 934

Profit from operations*
Return on sales in %

356
7.0

307
6.2

Income before tax

156

226

Net income

77

144

Total cash flow

370

85

Investments

255

281

Research and development
in % of sales

254
5.0

250
5.1

Equity954

862

Balance sheet total

5 369

5 148

Employees(without apprentices)

39 32942 955€ in millions* See the segment report in the notes to the consolidated financial statement.

The Voith Group in Figures

Annual Report 2008/2009

Annual Report 2008/2009

2008/09

2007/08

Orders received

4 958

6 092

Sales

5 083

4 934

Profit from operations*
Return on sales in %

356
7.0

307
6.2

Income before tax

156

226

Net income

77

144

Total cash flow

370

85

Investments

255

281

Research and development
in % of sales

254
5.0

250
5.1

Equity954

862

Balance sheet total

5 369

5 148

Employees(without apprentices)

39 32942 955€ in millions* See the segment report in the notes to the consolidated financial statement.

One company, four divisions …

… at home around the world

Voith AG

EuropeCorporate Central Functions

178 locations
24 481 employees€ 2 615 million in sales

Asia, Australia,
Oceania

Voith Hydro

Voith Industrial Services

Voith Paper

Voith Turbo

North America

Orders received: € 1 305 million

Orders received: € 1 018 million

Orders received: € 1 338 million

Orders received: € 1 292 million

35 locations

50 locations

Sales: € 1 085 million

Sales: € 1 018 million

Sales: € 1 743 million

Sales: € 1 232 million

5 352 employees

3 729 employees

Employees: 4 681

Employees: 19 118

Employees: 9 500

Employees: 5 428€ 702 million in sales€ 1 252 million in sales

Head Organization

Head Organization

Head Organization

Head Organization

Voith Hydro Holding

Voith Industrial Services

Voith Paper Holding

Voith Turbo GmbH & Co. KG,

GmbH & Co. KG,

Holding GmbH,GmbH & Co. KG,

Heidenheim/Germany

Heidenheim/Germany

Heidenheim/Germany

Heidenheim/Germany

Divisions

Divisions

Divisions

Divisions

Large Hydro

Facility Services Europe

Fiber & Environmental Solutions

Industry

Small Hydro

Facility Services Americas

Paper Machines

Rail

Automation

Industrial Services Asia

Automation

Road

Aftermarket Business

Process Services

Fabric & Roll Systems

MarineOcean Energies

Engineering Services

AfricaCentral andSouth America

3 locations
115 employees€ 53 million in sales

16 locations
5 652 employees€ 461 million in sales

One company, four divisions …

… at home around the world

Voith AG

EuropeCorporate Central Functions

178 locations
24 481 employees€ 2 615 million in sales

Asia, Australia,
Oceania

Voith Hydro

Voith Industrial Services

Voith Paper

Voith Turbo

North America

Orders received: € 1 305 million

Orders received: € 1 018 million

Orders received: € 1 338 million

Orders received: € 1 292 million

35 locations

50 locations

Sales: € 1 085 million

Sales: € 1 018 million

Sales: € 1 743 million

Sales: € 1 232 million

5 352 employees

3 729 employees

Employees: 4 681

Employees: 19 118

Employees: 9 500

Employees: 5 428€ 702 million in sales€ 1 252 million in sales

Head Organization

Head Organization

Head Organization

Head Organization

Voith Hydro Holding

Voith Industrial Services

Voith Paper Holding

Voith Turbo GmbH & Co. KG,

GmbH & Co. KG,

Holding GmbH,GmbH & Co. KG,

Heidenheim/Germany

Heidenheim/Germany

Heidenheim/Germany

Heidenheim/Germany

Divisions

Divisions

Divisions

Divisions

Large Hydro

Facility Services Europe

Fiber & Environmental Solutions

Industry

Small Hydro

Facility Services Americas

Paper Machines

Rail

Automation

Industrial Services Asia

Automation

Road

Aftermarket Business

Process Services

Fabric & Roll Systems

MarineOcean Energies

Engineering Services

AfricaCentral andSouth America

3 locations
115 employees€ 53 million in sales

16 locations
5 652 employees€ 461 million in sales

Contents
02

A word from the Board of Management

Voith and the World
04

A conversation: Dr. Michael Rogowski and Dr. Hubert Lienhard

08

On the road in India

16

Energy in flux

22

To keep the wheels turning

28

Paper is universal

34

No future without mobility

Management Report
42

Report of the Supervisory Board of Voith AG
for Fiscal 2008/09

46
48

The Supervisory Board
I. Group Structure and Business Activities

49

II. Macroeconomic Situation

52

III. Business Development

60

IV. Earnings, Assets and Financial Position

71

V. Research and Development

73

VI. Events after the Balance Sheet Date

74

VII. Report on Risks and Opportunities Facing the Company

81

VIII. Report on Non-Financial Performance Indicators

83

IX. Forecast Report

85

Corporate Governance Report

Financial Statement of Voith AG
87

Consolidated Statement of Income

88

Consolidated Balance Sheet

90

Statement of Changes in Equity

92

Consolidated Cash Flow Statement

93

Notes to the Consolidated Financial Statements

121

Notes to the Consolidated Statement of Income

128

Notes to the Consolidated Balance Sheet

150

Notes to the Consolidated Cash Flow Statement

150

Notes to the Segment Report

156

Other Information

173

Responsibility Statement

174

The Voith Group and Its Shareholdings

A word from the Board of Management

Ladies and gentlemen,business partners and friends of Voith AG,

We are pleased to look back at the 2008/09 fiscal year. It was yet another good year
for Voith. Sales and operating results were up over last year’s figures, setting new record
highs for the company. Orders received are at approximately the total value of annual
revenues, opening up positive prospects for a balanced fiscal year in 2009/10. Voith
continues to maintain sufficient liquidity, a crucial factor in times like these, because it
enables us to preserve our business agility. We at Voith are therefore looking to the futurewith confidence.
Over the last year, we reacted quickly and decisively to changing market conditions
resulting from the economic crisis, and adjusted capacities where necessary. Further,
the Board of Management worked intensely on refining the Group’s strategic direction
and improving our portfolio. We plan to increase Voith’s international orientation evenfurther and have resolved to grow the added value in the world’s regions. Over the longterm, we aim to become as deeply rooted in the world’s growth regions as we are in
Germany and Europe at the moment. Preserving and ensuring our independence as afamily-owned company remains a primary objective.
At the same time, we have looked within our own company and know what needs tobe done. Many important programs and initiatives were launched over the last year underthe banner of our “Excellence at Voith” campaign. Initial successes are already evident
in a number of areas throughout the company. One positive example is our job security
campaign. Due to our comprehensive, global focus on this issue, we have alreadyachieved significant improvements in a very short time. The job security of our employees, regardless of where in the world they are located, is just as much in our sights as
the Group’s long-term business success—which creates the only lasting basis for
employment and jobs.
Sustainability is a topic that continuously propels us forward. And we are optimistic in thisregard as well. Today, Voith is a company with the highest technological expertise andservice orientation. This puts us in a much better position than many others, not only for

2 | Voith Annual Report 2008/2009

recognizing a broad array of opportunities around the world, but also for seizing and implementing them both for our profit as well as the benefit of society.
This requires us to recognize global developments early on and to act as an expert
partner and visionary working on solutions today for the problems and challenges that
our customers will face tomorrow. For that reason, Voith has maintained its level of investment in research and development despite the difficult market situation. At more than
€ 250 million, our investments here were in fact slightly higher than the substantial investments of the previous year. All of our Group Divisions consistently focus their activities
in this area to accommodate aspects of sustainability. Environmental friendliness,resource and energy efficiency, clean and renewable energy generation—these are thekey challenges facing the 21st century and the central theme of our research and development strategy at Voith.
Many people have contributed to Voith’s success over the past year. On behalf of mycolleagues on the Board of Management, I would like to thank our shareholders, theShareholders’ Committee and members of the Supervisory Board for their dedicatedsupport and trust. Our gratitude is owed to our customers for their positive collaboration—even in difficult times. We likewise extend a very sincere thank you to our employees for the level of personal commitment they have shown this past year. Another yearof major challenges and opportunities lies ahead for us all.
It is only companies offering products and services that enable their customers to remaincompetitive that will enjoy long-term economic success, in turn enabling them to be areliable partner for society as a whole. We work every day to ensure that Voith remains
just such a business: A company with excellent prospects for the future because it operates proactively today and consistently charts its course anew to meet the importantsocietal megatrends of tomorrow.
Sincerely yours,

Dr. Hubert Lienhard

Introduction | 3

Determination and depth
provide momentum and action
Snapshot of walking the tightrope between dynamic drive and remaining
down-to-earth, staying close to home and operating globally: A conversation
with parting Supervisory Board Chairman Dr. Michael Rogowski andVoith President and CEO Dr. Hubert Lienhard.

Dr. Rogowski,

Dr. Rogowski: When I joined the company back in 1974, Voith was a traditional export

Dr. Lienhard: Bothcompany: Everything was centered around our headquarters in Heidenheim. We merely

glancing backhad two larger locations outside of Germany, in Austria and Brazil, and those had beenand looking forward:

established for a long time. We knew, however, that we truly had to do business worldwide

What challenges hasin order to be successful. Our growing internationalization, including adding value locally,

Voith mastered andwas one of the two major tasks. The other challenge was expanding our portfolio. We want-

which ones lie ahead?

ed to become less dependent on cyclical business and make Voith more recession-proof
and more immune to any crisis. We pursued this objective with great resolve—and our success over the years, including during the current economic crisis, has proved us right.
Dr. Lienhard: Today, we find ourselves in the situation of needing to consolidate in certain regions around the world, while at the same time needing to grow rapidly in other markets. To put it another way: We have to step on the gas and activate the brakes at the sametime. Different speeds in global development—that’s nothing new. The big difference
between now and back then is the actual number of people who are on the same path
today: 2.6 billion individuals who all want to participate in that growth at the same time—that has never occurred before. Above all, that requires us to be flexible, adaptable—bothas a company and as people. Nowadays, we don’t just ship our products out into the world
but rather, the world’s requirements shape the development of our product portfolio.
Dr. Rogowski: The world is our home, our market.
Dr. Lienhard: Exactly. And in this regard, I predict that Voith will have a number of homes
in 2030 or 2040. As such, we will need to redefine the term “home.” The company’s headquarters will remain in Heidenheim, near Stuttgart. That’s where we’re from.
Dr. Rogowski: Our roots are here.

A conversation | 5

Dr. Lienhard: And here is where they’ll remain, because they go deep. But we also haveto put down new roots. In 20 or 30 years, Voith will have large organizations in Asia, theAmericas and in Europe. And we will have developed both regional products and global
products. That, too, is merely a question of attitude and approach. We need to chart a
course for the future here and now. I’m saying: In the future, Voith will be right at homeeverywhere that Voithians work for us.
Dr. Rogowski: That’s absolutely right. And that takes vision and planning. For me, having
vision means drafting ideas of what the future could look like. And planning means setting priorities and pursuing issues with determination, even if you do have to abandon
something now and then.
How important

Dr. Rogowski: I am a huge fan of forward action and advocate the philosophy: Somethingis change foralways has to be in motion. Moss can’t grow on a rolling stone. If nothing is moving for-entrepreneurial

ward, you risk moving backwards. You can become accustomed to things easily and cease

success?

to ask questions. That is risky, for the world is constantly changing and confronts us withnew issues. During the ups and downs of my 36 years with Voith, I faced new challenges
all the time. That was my motivation.
Dr. Lienhard: Companies need to adjust continuously and quickly to the new realities
brought about by change. Reevaluate topics and issues regularly. I’ll offer one example toillustrate: Back in the 1970s, the environmental movement was primarily focused on theidea of saving energy. Today, our environmental awareness isn’t solely concentrated on
the topic of oil shortages, but on the global warming effect. It’s about CO 2 emissions,and their consequences for our planet. So the topic has taken on a whole new direction
and gained urgency as well. That has an impact on our business. With its immense potential as renewable energy, hydroelectric power is seen in a totally new light now than it wasback in the 1990s. For me personally, the topic of change makes me think primarily about
how I handle issues even better, down to the last detail. Herein, I see opportunities, andthat feeds my thirst for action: Moving forward to improve is what drives me.

With all this forward

Dr. Rogowski: Momentum without determination and depth—without roots—usually runs

motion and momen-

afoul. Whenever you want to advance, you need to make the effort to dive in, dig deep downtum … What holds aand doggedly work your way from the inside out. I think it is very important that people

company like Voith

working together in a company recognize: We have a history, we have traditions, we share

together worldwide?

a common value structure. At Voith, this value structure is founded on an attitude that has
been shaped by our background. I’m not one of those people who believe that you can orshould do everything the same way in China, Germany or the US. Yet the globally applicable foundation of an organization must be based on certain fundamental values.
Dr. Lienhard: A shared background creates one thing: a common foundation. It’s the sameas in a family. There is a common consensus about values—essentially the rules of thegame—that each family member feels bound by. Acting within those values, each individual can and should develop themselves and grow. Voith is a family-owned company
with fundamental values that are clear to everyone. They govern how we deal with one
another, what we expect from each other. This self-conception is independent of location,

6 | Voith Annual Report 2008/2009

Conversation in the garden at Eisenhof, the Voith guest house: Dr. Michael Rogowski (right) and Dr. Hubert Lienhard. After 36 years at the family-owned
Voith company, Dr. Rogowski will be stepping down from his position in April 2010 and simultaneously assume leadership of the Hanns Voith Foundation.

and it binds us together. I see an immense competitive advantage in our employees’ loyalty
for Voith. And that dedication keeps Voith together, regardless of any momentum.
Times of crisis, growth

Dr. Rogowski: Corporate management is based on principles and values, but it’s always

periods—both represent

somewhat situational. You need to set different priorities according to each situation. And

challenges for organizations.

above all: Mobilize other qualities and characteristics in yourself, and position them up

Are there any sure

front and center. Sometimes you have to be the guardian of budget cuts, sometimes theformulas for good corporate

driver, sometimes the integrator, and sometimes the provocateur. And naturally in a way

management?

that your team can still follow.
Dr. Lienhard: For me, leadership and management means investing my energy. In realworld situations, this almost always means moving ahead and setting a positive example.
It helps if you achieve visible success quickly—which also requires a great deal of communication, evaluating and discussing other opinions, and the hard work of persuasion.
But above all else: endurance and determination.

Dr. Rogowski, have you

Dr. Rogowski: I don’t think I need to give them any more advice. It’s already been inter-

any advice to share withnalized. But it is also not a bad idea to repeat the important things once in a while. So on

your colleagues at Voith?

that note: Be determined and don’t let up when truly convinced of something, while at thesame time retaining the ability to reassess and question matters, as well as letting go when
the times demand it.

A conversation | 7

Of trees, deep roots andgreat opportunities.
On the road for five days in India.
Personal impressions from the members of Voith’s
Board of Management, as noted by Dr. Hubert LienhardT

he entire Board of Management of Voith AG went on a business trip to India in earlyNovember 2009 to gain a first-hand impression of this growth market. In addition toattending a Board meeting, the trip’s primary objective was to meet with customers
and representatives of government and social institutions.
Sunday, November 1, 2009, Delhi
There is a new freeway from the airport into the city. Cranes and construction equipment are everywhere. My first visit here was 20 years ago and India in 2009 is a completely different country. Making an international call was almost impossible in 1989,
for instance. Today I’m sitting in the car and talking on my mobile phone to my officein Germany. But despite all the progress, poverty is pervasive. My impression: Only
economic growth can improve the situation. Nowadays, as many as 20 million Indians manage to escape poverty conditions every year.
Monday, November 2, 2009, Noida
Morning: Board meeting in Noida, a suburb of Delhi. We established the Voith location two years ago. Back then we occupied one floor; now our 170 employees takeup the entire building. My gaze settled on the tree I planted on the day of our grandopening here. It hasn’t grown much taller. Amresh Dhawan, who heads up our operation there, says that the tree is a “deep rooter,” which establishes its roots underground first and then grows all the more vigorously.
We discussed a number of topics at the Board meeting, including our plans for India.
The established road maps for our divisions are in place for the next few years. Investments in locations and facilities will pay off in the long run.

President and CEO Dr. Hubert Lienhard with
Narsim Shenoy, India Advisory Board, Voith.

On the road in India | 91

2

Evening: Dinner with customers, government representatives, professors and officials. We’ve known many of our guests for 20 years. I talked about our strategy, that
Voith wants to set down deep roots in India, and have to think of the tree in front of
the Voith office. Anchoring Voith in India’s business community as firmly as in Germany—our clear objective makes a good impression. We enjoyed the positive atmosphere, talking about subjects including recycling, energy supply, infrastructure, andeducation. Opportunities for Voith abound.
In speaking with CFO Hermann Jung at the end of the evening, we both feel this successful day confirms our belief that we are on the right path. At the same time, wefeel we’re moving too slowly. We need to step on it!
Tuesday, November 3, 2009, Delhi
In the morning, Board members Roland Münch, Hans-Peter Sollinger and Bertram
Staudenmaier gave technical presentations on hydroelectric power and paper. A great
number of top industrial and political figures accepted the invitation to attend. Environmental topics are a high priority here, everyone is well-informed and engaged ina lively discussion. What stood out: Questions kept coming about how projects could
be accelerated. How to pick up the pace. We won’t be the roadblock.
We spoke with government representatives in the afternoon. These talks focusedon key topics for India’s economic development: employment, the environment, competitiveness. These are the topics we need to tackle. In every discussion, we made10 | Voith Annual Report 2008/2009

3

1_ Peter Edelmann (left),
CEO of Voith Turbo and Memberof the Management Board,
talking with Debashis Basu, Voith
Turbo India.
2_ Bertram Staudenmaier (left),
Member of the Executive Boardof Voith Paper and Memberof the Management Board,in conversation.
3_ Dr. Roland Münch (center),CEO of Voith Hydro and Memberof the Management Board, inconversation with Chandrasekhar
Panigrahi (left), Voith Paper India,
and Amresh Dhawan (right), Voith
Hydro India.

it clear that Voith’s service and technological expertise can and will make a valuable
contribution to solutions in all of these areas.
Wednesday, November 4, 2009, Pune
Board of Management colleagues Martin Hennerici and Peter Edelmann joined thegroup here at the heart of the Indian automotive industry. Later they both gave positive reports, impressed by the high standards in the manufacturing facilities they visited. The hectic, vibrant everyday life in this megacity is a stark contrast to the clean,
streamlined high-tech factories. Nevertheless, they face the same challenges as therest of the world. The name of the game is to gain customers, win initial reference
projects and build trust through excellent implementation.
Thursday, November 5, 2009, Kolkata
We met at the Voith Paper office. Managing Director Chandrasekhar Panigrahi—who
has been with Voith for over 30 years—spoke once again of a tree in his welcome
speech. This time as a symbol for nourishment, shade and protection, and he used
it as a comparison for companies. Businesses that are in for the long haul and set
down deep roots. Companies such as the family-owned business Voith, thus offering personal prospects to its employees and their families.
That afternoon we visited our client, West Coast Paper. One thing quickly became
clear: There exists a deep-seated relationship between India’s Voithians and West
Coast. People know each other, respect each other, and need one another. Even moreOn the road in India | 11

1

2

3

“Understanding a country means
knowing its people.”
PROVERB

so because the paper market in India will continue to grow. In our personal conversation, we came right back to the same topic. Customized solutions rule the day.
India’s paper manufacturers don’t want large factories; they prefer smaller high-techplants to serve regional markets, that require easier financing. Hans-Peter Sollinger
presented Voith’s concept for this type of facility—with great success. After a few
impressive hours in Kolkata, we continued on to Chennai that evening.
Friday, November 6, 2009, Chennai, Mumbai
That morning we paid a visit to Tamil Nadu, another Voith customer for many years.
As in the rest of the world, energy-saving technologies drive investments here in India
as well: Lower consumption of water, raw materials and energy is in demand. We are
perfectly positioned with our environmental technology.
An afternoon flight to Mumbai, where Peter Edelmann and I meet with a high-level
representative of Tata Motors. I was impressed by this man’s competence and mod1_Martin Hennerici,
CEO of Voith Industrial Services andMember of the Management Board.

est demeanor. He works six days a week in the office, and Sundays at home. The

2_Dr. Hans-Peter Sollinger,
CEO of Voith Paper and Member ofthe Management Board.

work hard to that end. And it isn’t about getting to the top quickly, but rather devel-

3_From left to right:
Dr. Roland Münch,Chandrasekhar Panigrahi,Peter Edelmann,
Martin Hennerici,
Bertram Staudenmaier,Dr. Hubert Lienhard,
Dr. Hermann Jung.

Saturday, November 7, 2009, return flightcompany is an absolute priority for him. In his presence I feel something that I sensein conversations with many Indians: The people want to get ahead, and are willing to
oping a healthy basis for long-term stability.

We all sorted out our impressions on the flight home. India is growing—it has to grow.
But it is growing with substance, founded on clear ideas and firm roots. In that sense,a true “deep rooter.” Which also applies to many of our Indian customers. As afamily-owned company with 140 years of history, Voith knows what that means. Perhaps that is the reason why we say: Voith and India? It’s a perfect fit!

On the road in India | 13

1

6

2

7

5

3

4

14 | Voith Annual Report 2008/2009

Impressions of an Executive tour

“Jobs, the environment, competitiveness. These are the three issues we need totackle, if we want to put down roots in India.” 1_ DR. HUBERT LIENHARD, PRESIDENT AND CEO“Even at first glance, it is obvious that India is catching up! The developmentof the nation’s economy and society is advancing, for thepolitical framework is increasingly stabilized.” 2_ DR. HERMANN JUNG, CFO“India needs energy in order to grow, and the market for hydro power therefore
is huge. As for new projects, environmental issues play a decisive role.”
3_DR. ROLAND MÜNCH, CEO VOITH HYDRO, MEMBER OF THE MANAGEMENT BOARD“I am impressed by the standards of the Indian automotive industry and the vast potential
for growth. The expectation for service providers is clearly defined: outstanding quality
and reliability.” 4_MARTIN HENNERICI, CEO VOITH INDUSTRIAL SERVICES, MEMBER OF THE MANAGEMENT BOARD“The paper consumption of India will grow, and India’s paper industry will respondto rising demand with investments in modern, customized facilities.”
5_BERTRAM STAUDENMAIER, MEMBER OF THE EXECUTIVE BOARD OF VOITH PAPER, MEMBER OF THE MANAGEMENT BOARD“Indian customers do not want standardized products. Our opportunity lies in
the flexibility to adapt products to specific requirements and develop them on-site.”
6_ PETER EDELMANN, CEO VOITH TURBO, MEMBER OF THE MANAGEMENT BOARD“Our urban paper mill concept is the Nano for India’s paper industry.
Smaller plants with state-of-the-art environmental and production technology
are in demand. These are enormous opportunities.”
7_ DR. HANS-PETER SOLLINGER, CEO VOITH PAPER, MEMBER OF THE MANAGEMENT BOARD

On the road in India | 15

Energy in flux
The world’s demand for electricity
will increase by more than 50 percent
in the next 20 years. Rivers andoceans hold enormous energy
potential—which is renewable
and thus inexhaustible.

1_Lock at the Cannelton Dam:
Currently only used by ships,
they will soon produce electricity.

T

he water from the Ohio River flows through lock chambers that pass through the

2_ Retrofitting projects on the
Ohio River have begun. Whether
by hand …

Cannelton Dam located in the State of Indiana. A few tourists gaze upon the splen-

3_ ... or with large excavators,

current at this location is not being used–not yet.

work is proceeding at full speed.
The objective is to convert
the river’s power into electricity.

did spectacle of the mighty river’s flow. The power performed by the Ohio River’s
That will change very soon. Mankind can no longer afford to leave the energy contained in rivers such as the Ohio untapped. The world’s demand for energy is on therise–everywhere. Industrialized countries, emerging nations, and developing regions
all share a continuously increasing appetite for affordable, reliable, available, renewable energy generated in an environmentally friendly manner. An end to this trend
cannot be imagined or foreseen at the moment. The International Energy Agency estimates that the worldwide demand for energy will increase by some 60 percent in
the next two decades.
Today, a strategy is needed as to where and how electricity is to be generated
in 2030. Much depends on it, for a functioning economy and infrastructure exist primarily due to a reliable energy supply. Supply reliability is one issue, environmental
protection is the other. Given the advancing climate change, one must press aheadin using and expanding renewable energies wherever possible. Accordingly, the market for solar, wind, and hydroelectric power plants will continue to grow substantially over the next several years. Given this array of renewable energies, hydroelectric

18 | Voith Annual Report 2008/2009

2
1
3

The conversion of locks and dams
into hydro power plants makes green
energy available at greater speed.

power will assume a particular role for various reasons. It is stable and not dependent on weather conditions or the time of day. Wind turbines, for instance, generate
no power when there is no wind. And even the best solar power plant does not feed
electricity into the grid at night. On the other hand, electricity from hydro power plants
is available 24 hours a day. Their output, which can be enormous for some plants,
currently supplies cities with heat and light. Even in the realm of energy-intensive

Energy in flux | 19

Rotor of a hydro turbinewith fish-friendly equipment. With this type of
turbine, Voith has madean important contribution
to safekeeping the ecosystem in North America.

industries as exemplified by steel mills and automobile plants, providing the hugeamounts of electricity they require is no problem.
Converting the water’s power into electricity through turbines and generators is
a technology that has proven itself for more than 100 years, and Voith has played amajor role in shaping this growth market. Today, hydroelectric plants are consideredsome of the most efficient energy extraction facilities ever. Modern water turbinestransfer more than 95 percent of the river’s power to generators, and that is an unparalleled world record in terms of conversion efficiency.
It should therefore not be surprising that hydro power is presently used throughout all of the world’s regions. Flexibility is its biggest advantage because there ismore to hydro power than the name. It adapts to existing conditions. Emerging countries like China and Brazil are currently building very large power plants based upon
their respective geographies and the number of major rivers flowing through them.
In India, on the other hand, there is greater potential for smaller plants. In Europe,
where countries such as Norway already draw 99 percent of their energy from hydroelectricity, the emphasis is primarily on modernizing already existing power plants.
The objective here is to obtain maximum output from the existing plants.
Time is of the essence here. In many countries around the world, energy has
become a decisive competitive factor. In the meantime, excavators have moved inon the Ohio River, as they have elsewhere. The idea is both simple and ingenious:
equip river barriers already in place with turbines and generators to produce electricity—without encroaching again on the riparian environment. “The energy of thewater that flows through the existing locks and dams already in place on the Ohio
River has simply not been used to date,” says Marc Gerken, CEO of American
Municipal Power-Ohio. But that will change soon. In cooperation with Voith, AMPOhio is manufacturing turbines and generators for four projects on already existing river structures and locks between Pittsburgh and the mouth of the Ohio River.
And that is just the beginning. The untapped potential in utilizing river barriers ishuge. “We are not talking about a lot oflarge, new reservoirs. This is a one-time
opportunity and currently the most cost-

Voith technology with environmental seal: the fish-friendly turbine

effective option for clean energy,” says
Steven Chu, the US Secretary of Ener-

Every region has its own requirements when it comes to the environmentally

gy. A study by the Electric Power

optimized implementation of hydroelectric plants. In North America, for exam-

Research Institute (EPRI) projects thatple, salmon are a critical component of river ecosystems in the Northwest. Overin the US alone, existing dams could

the course of their lives, they migrate from rivers to oceans and back. The chal-produce about 5 000 MW by 2025. That

lenge posed by this journey is to channel the fish through a hydro power plantis enough to supply electricity aroundon their way upstream without injuring them. In close cooperation with biolo-

the clock to five cities with populations

gists, Voith engineers developed a solution, namely a fish-friendly turbine. Theof over a million each.

special design of this turbine-type enables 98 percent of the salmon to survive their passage through the power plant.

The Ohio River is being roused fromits idle state and put to work. It will cre-In the next ten years, many North American hydroelectric plants must be

ate clean energy for the benefit of mil-retrofitted in accordance with new environmental guidelines. The demand forlions of people based on an idea withfish-friendly turbines made by Voith will grow in this market.

role model allure.

Energy in flux | 21

To keep the wheels turning
The ability to focus on core businessactivities has clear advantages. As
experts, industrial service providers
ensure the availability of systems andbuildings—around the clock.

1

24 | Voith Annual Report 2008/2009Mario Bemerl has one of the wind-

have in common? They belong to theiest workplaces in Germany. Today, thealmost 20,000 employees of Voith whotechnician is changing the oil in thework as industrial service providers.

gearbox of a wind turbine—in a very

They are all specialists in their respec-

confined space, 120 meters above thetive areas. In many different countries,

ground. In an office located in northern

segments, and task areas, they work

Germany, Axel Meyer looks at his com-

directly on-site and are “out there” with

puter screen where the wing airfoil of athe customer at its business locations.

new passenger plane is currently taking

They know its systems and facilities likeshape. It is the result of weeks of delib-

the back of their hand.

eration and calculations. At the same

Today, there is hardly a company lefttime, at a completely different location,that still does everything on its own.

Fred Dube enters the paint booth in an

Only those who focus on what they do

automotive manufacturing plant. From

best will create entrepreneurial maneu-

the floor grid to the ceiling, the entire

vering room for themselves and can uti-

area is marked with traces of excess

lize existing resources in a more efficientpaint. Dube is part of the team thatand target-oriented manner. Growthcleans the booth. By the time the next

potential in the industrial services mar-shift comes in, the paint residue must

ket is huge. In Europe alone, the manu-

be completely gone.

facturing and process industries award

Three individuals, three workplaces,€ 100 million worth of contracts per

three different tasks. What do the threeyear. There is no end in sight for this1_ Maintenance work in
refineries has the upmost
level of safety and quality
standards.
2 _As a service provider, themain credo is expertise. Thereexists an entire know-how
organization behind every
Voith employee.

2

Nowadays, industrial services areclosely tied to production processes.

growth, for it has become a successlater dismantling of production plants,

house at all times. Accordingly, employ-factor for companies to transfer certain

all the way to the maintenance andees who work at the customer’s location

parts of their value-added services toservicing of buildings and machines.

assume a special responsibility.

experts such as Voith.

The services are often closely tied to“The globalized economy offers anSpecialists like Voith focus on

the companies’ production processes.

opportunity especially to those who are

selected industries where a service

Increasingly, even demanding engineer-able to offer globally innovative, first-

provider can accompany and support

ing tasks are assigned as contract work.

class services at reliable quality—either

large sections of the value chain. It

Companies procure external expertisein conjunction with a product or inde-extends from designing a system andfor highly specialized projects to avoid

pendently,” confirms Professor Dieter

its components, to the installation andhaving to maintain such capacities in-

Spath, head of the Fraunhofer InstituteTo keep the wheels turning | 25

1_Only teamwork can
accomplish complex tasks
anywhere in the world.
2 _ Surely a determining factor
for the quality of the final
product: the professional
cleaning of automotive
paint shop equipment by
Voith employees.

1for Industrial Engineering (IAO) in Stutt-

transfer of knowledge are the keys toexperience and capabilities as a glob-

gart/Germany. In this realm, the primary

quality and worldwide standards, as areally active partner.

task of the Voith employees providing

improvement tools such as Human

That specifically works on-site at thecustomer services is to deliver consis-

Sigma, a variant of the Six Sigma qual-customer’s location and it helps whentent, reliable quality—regardless of the

ity management system. This way, Voith

gaining a foothold in new markets. As

project, the general conditions at thecan make services transparent andone of the leading service partners incustomer location, or the people who

quantifiable for customers in the US

the car manufacturing industry, Voith isultimately take over the task. It does not

auto industry. And it helps to place alaunching operations in Pune, India.

matter where in the world the request-

figure on the value of services and toHere, in one of the major centers of theed service should be performed. A

define quality standards.

Indian auto industry, more than four mil-given assignment could be carried out

Customers place high expectations

lion cars will be built annually in theon a wind energy installation or in front

on their service providers: For a longforeseeable future. Many companies,

of a computer screen, or in a paint shop

time, cost-related discussions dominatedincluding Volkswagen, Daimler and Tata

located in the United States, Germany,

meetings with customers. Today, com-

Motors, are already present with their

Brazil or China.

panies expect internationally active

production facilities. The prospects for

Yet services are not provided byservice providers like Voith to provide

service concepts that have success-machines. A platitude? Perhaps, but

continuing improvements in quality andfully proven themselves in Brazil, thewith far-reaching consequences forinnovative impulses.

Czech Republic, Russia, Germany andsuccessful industrial service providers.

The specialized expertise of thethe US are substantial. Voith has all the

For the driving force behind any

service providers plays a role in the cus-prerequisites to seize the opportunities

success story is the people and their

tomer’s increased productivity when thepresented by this future market on theexpertise. Interconnectedness and theprovider can apply and tap its own

subcontinent over the next few years.

26 | Voith Annual Report 2008/2009

2

Three questions for Professor Dieter Spath
Head of the Fraunhofer Institute for Industrial Engineering (IAO) and the Institute forLabor and Technology Management (IAT) at the University of Stuttgart

While outsourcing services was still rather unusual in the early 1990s, the initial skepticism has
disappeared. What caused that opinion to change?
Ultimately, this can be attributed back to the fact that in the meantime almost all large-scalecompanies have selectively outsourced business processes to external providers and have acquired
experience doing so. The motives for the steady increase in these outsourcing activities are complex.
What role does the cost argument play in this matter?
Cost reduction certainly plays a decisive role. However, other important factors include focusing on
one’s own core areas of expertise, filling in any missing internal resources and increasing performance by drawing on external knowledge. That is what our surveys repeatedly point to. In addition,
many fast-moving technological fields are having greater difficulty keeping up with developments at
the highest level of quality.
How far should outsourcing go?
I believe that outsourcing services becomes critical when it affects a company’s core expertise.
In order to hold one’s ground against the competition over the long term, it is essential to maintain alead in central areas—be it through lower costs, higher quality or more innovative service offers.

To keep the wheels turning | 27

Paper is universal
Modern societies find thisimportant material a requisite
to function. Environmental
technologies are a smart way
to help cover the growing
demand, with recycling being
one key to success.

1

1_ Cardboard for the packaging
industry: one of the typesof paper with the fastest growth
rates worldwide.
2_Paper conveys informationand is essential for learningand literacy.
3_ Paper has diverse uses.
Every type of specialty paper
meets particular requirements.

For almost 2 000 years, paper has accompanied mankind as a cultural medium andhas not lost its significance in our digital age. On the contrary, “paper is one of
the few tactile things that we even have in the communications realm,” explains
Professor Norbert Bolz, a communications theorist at the Technical University of
Berlin. Paper makes information tangible in the truest sense of the word.
Yet paper is more than material used for printing or copying purposes and morethan purely an information-carrying medium. Only about 40 percent of the 400 million metric tons of paper, board and cardboard produced annually worldwide areutilized for writing, printing or copying. While a certain percentage travels throughour hands daily as specialty and household-use papers in the form of tea bags,
paper towels and currency bills, almost half of the worldwide paper consumption
is attributed to industry. It uses board and cardboard for packaging goods or fornoise and heat insulation in home construction. Even dashboards and interior trim
in cars are manufactured from paper-based hardboard.
These few examples indicate the diverse uses of this fibrous material and thescope of the worldwide growth potential for paper machine manufacturers. One
look at a world map reveals that paper will face a variety of challenges in the future.
Experts such as Marja Eskman, head of paper and packaging at Pöyry Forest
Industry Consulting, based in Vantaa, Finland, see a lot of untapped business inemerging economies such as Brazil, Russia, India and China. After all, paper consumption in these countries is still nowhere near the levels found in older, fully

30 | Voith Annual Report 2008/2009

2

3

Paper is the material green dreams
are made of: degradable, renewable
and recyclable to boot.

Paper is universal | 31

1

2

1_Paper is the basis for
spreading information—evenin the Internet age.
2_The Leipa Schwedt PM4
produces high-quality
magazine paper out of 100
percent recovered paper.

industrialized nations. While India’s population currently consumes just aboutnine kilos of paper products per person per year, consumption in the United Statesamounts to more than 260 kilos per person annually. The United Nations assumes
that 30 to 40 kilos of paper are required to satisfy just one person’s basic reading
and communication requirements alone. That means that in these up-and-coming
regions, the demand for graphic paper will grow substantially.
As prosperity rises, the demand for books and magazines for learning andliteracy purposes is not the only determining factor. Greater prosperity means
more consumption and more production. This in turn increases the demand forindustrially processed cardboard, packaging to ship and export goods, the useof household-use papers, and ultimately also the number of currency bills required.
For China and India alone, Pöyry is projecting an annual growth of 3 to 4 percent
in the future. With this trend, investments made by paper companies will increasingly shift to fast-growing regions, and in the foreseeable short term, China will
evolve into the world’s biggest paper producer.
However, even the mature paper markets in today’s industrialized countries still
hold tremendous development potential for the paper industry, for the basic conditions associated with paper production are going through fundamental changes.
Being sought nowadays are energy-, water-, and raw-material-preserving technologies that make the manufacturing process more environmentally friendly. The useof recovered paper is playing a major role here to spare the consumption of valuable primary paper fiber. By 2020, the projected worldwide paper production will

32 | Voith Annual Report 2008/2009

climb to 500 million metric tons. With a simultaneous increase in the use of recovered paper from today’s 50 percent to 64 percent, the quantity of required primaryfiber could remain constant (see chart). As one of the pioneers in the area of recovered paper processing and environmental technologies for paper mills, Voith is looking at outstanding market prospects—and all the more so given that environmental considerations have become more
Green growthsignificant in emerging nations over thethrough recycling

last several years. Take China, forexample. In the very country where
paper was invented 2 000 years ago,
500 million t

the focus is increasingly on sustainable,
resource-preserving paper production.

400 million t

When analyzing the situation, “the useof green technologies is one of the key

Recoveredpaper

Recoveredpaper

factors,” says Cao Zhen Lei, presidentof the China National Pulp and Paper
Research Institute, and adds: “We still

Primaryfiber

Primary
fiber

have a long way to go.” Yet there is alsoa Chinese proverb that projects that “ajourney of a thousand miles begins with

2008
Recovered paper

2020
Primary fibera single step.” And that step has beentaken already.

Paper is universal | 33

No future without mobility
Rapid urban growth and economic
globalization mean one thing: People
and goods must be moved quickly,
safely and reliably. This requires
massive investments in infrastructure.

1_ Everyday life in Mumbai:
Millions of residents experience
traffic jams on a daily basis.
Innovative local transportation
systems provide relief.
2_Subway trains such as the
Number 1 line in Beijing are thelifelines of a modern metropolis.
Without metro systems, major
cities with millions of residents
would descend into chaos.

36 | Voith Annual Report 2008/2009

Mumbai never stands still—and mostand freight in a secure and environmen-

certainly not around noon. For this istally friendly way. Mumbai is investing

when more than 5 000 dabbawallas€ 4.1 billion in the mobility of its inhabi-

swarm around the palatial train station

tants. That is how much the new mono-

and the entire city center. These lunch

rail system, which should ease the worst

delivery men balance tiffin boxes inof the traffic problems, will cost. And

broad carriers and transport them tocomponents from Voith Turbo will be part

offices throughout the Indian businessof it all when the new train commences

metropolis. A daily slalom through stink-

service in late 2014.

ing, blue clouds of auto exhaust belch-

And that is just the beginning. In

ing from the traffic jam that crawls along,global population centers such as Delhi,

honking all the more loudly because of

Manila, Rio de Janeiro, São Paulo andits slow progress.

Shanghai, the transportation infrastruc-

Mobility in the Mumbai metropolitan

ture always lags behind populationarea, or rather the lack thereof, is andevelopment. And no wonder. Whileurgent problem for the 20 million people

only three percent of the world’s popu-

who live there. Getting stuck in traffic

lation lived in cities 200 years ago, that

hampers economic growth and brings

number had already risen to one-third

industrial centers to near collapse. For

some 30 years ago. Experts from theVoith, however, this problem is exactly

United Nations believe that for the first

the opposite: It represents a growth driv-

time in history, more people currently live

er and challenge to implement intelligent

in cities than in rural areas—which pre-technologies to move the flow of people

sents the challenge of a century for1

Solutions for the future require reliable
partners with technology expertise.
EXPERT OPINION IN THE SMI STUDY “FUTURE OF LOGISTICS – GLOBAL SCENARIOS”

urban planners and transportation

And the opportunities are equally great

Wherever people and goods need to beexperts. Modern transportation systems

for companies offering technologies thattransported, Voith technology and engi-

secure more than people’s urban mobil-

can support the mobility industry: The

neering expertise is most likely involved.

ity, however, but connect a metropolis tocurrent market for train-technology

Starting with the power plants that sup-its surrounding region. Absolutely essen-

products alone represents a volume ofply trains and local transportation sys-

tial when the primary objective is toabout € 125 billion in 2009. Experts aretems with energy, Voith components

transport people and goods from point

predicting an annual growth rate world-

operate in central locations to ensure the

A to point B on time, securely and effi-wide of about four to five percent overpower supply. Scarcely a metro train or

ciently. They form the foundation for a

the next few years.

subway, passenger train or freight trainfunctioning economy and society in aWith market size comes the chal-runs without drive systems, control

globalized world that is based on thelenge of addressing the multiple facets

technologies, cooling systems, joint

division of labor, and also contributesof mobility in the 21st century. Be it on

shafts or couplings from Voith. To an

significantly to reducing CO2 emissions.

the road, rail, water or in the skies:

increasing degree, there are hybrid2

systems for railcars and locomotives

These are pioneering technologies andmodern in the world, owes a good deal

that use electrical, hydraulic or mechan-services that secure companies top rank-of its functionality to Voith components.

ical power storage. Cutting energy costs

ing in the highly dynamic mobility market.

Or as another example, the anticipatedand reducing emissions that damage“Just getting from A to B isn’t everything,”

concentration of transport capacities

the environment are just as much objec-

says Heiko von der Gracht, Director ofthrough megatrucks with more than 60

tives as overcoming purely mechanicalthe Center for Future Studies and Knowl-

tons of load capacity or gigantic contain-

issues. Automatic transmissions andedge Management at the Supply Chain

er ships. A lot of work for new escort andbraking systems from Voith ensure driv-

Management Institute (SMI) in Wies-

other ship-handling vessels.

ing comfort in buses and safety in com-baden/Germany. The authors of the SMI

The enormous importance of rail traf-

mercial vehicles in major cities andstudy “Future of Logistics – Global Sce-fic remains undisputed—now and in theroads all over the world. And Voith tech-narios” asked experts from the business,

future—when the subject matter comes

nologies support mobility on the highpolitical and scientific communities toto transporting the growing flow of peo-seas where logistics processes interface

make predictions about the future. The

ple and goods in a reliable, cost-effec-

as well: Voith water tractors safely

majority of them anticipate a more flexi-

tive and environmentally friendly way.

maneuver oil tankers to terminals; spe-

ble and efficient deployment of trans-

Voith believes in these markets of thecial ships supply drilling platforms evenportation capacities that saves resources

future, and for that reason has invested

in adverse weather conditions. And inas well. Intelligent traffic control systems

around € 40 million in a new production

the air? Voith’s engineering expertiseand greater automation of transportation

facility in Germany for manufacturing

can be found in tail units, airfoils andsystems should revolutionize the trans-

railcar transmissions.

rudders on the aircraft that fly businessportation of people and freight by the

The new facility will come online bypeople to their next appointments andyear 2030. Dubai’s fully automated metro

the late 2010 and represents an invest-

carry families on vacation trips.

system, for example, which is the mostment in the future at the right time.

1

Three questions for Dr. Hans-Liudger Dienel
Director of the Center for Technology and Society at the Technical University Berlin

The future is globalized. In this context, what does mobility mean today?
Freedom, social participation, social status. In megacities, however, it also meansnoise, stench and many traffic deaths.
A businessman in the US, an employee in India and a Chinese laborer—all three
are mobile. What do they have in common despite all of their differences?
Mobility is the engine of development everywhere. We are currently experiencing another strong urbanization trend in developing and newly industrialized countries. China alone has over 100 cities with more than one million residents. Mobility problems in rapidly growing cities that are not adjusting their transportation
infrastructures accordingly, are much worse than mobility problems in Westerncities, some of which are actually shrinking. In Berlin, people actually consider it
a traffic jam, if they can’t make it across an intersection at the first green light.
How can megacities resist a transportation collapse?
Just letting things go and enduring the situation is not a long-term option.
We will see a large number of mega-infrastructure projects that will be launchedin the coming years.

2

1_Globalization doesn’tstop at the skies. Air freight
volumes have increased morethan a hundred times sincethe 1950s.
2_ Voith’s roll stabilization
keeps this supply vesselfor oil platforms steady andfully maneuverable in heavy
weather conditions.

No future without mobility | 39

Management Report
42

Report of the Supervisory Board of Voith AG
for Fiscal 2008/09

46
48

The Supervisory Board
I. Group Structure and Business Activities

49

II. Macroeconomic Situation

52

III. Business Development

60

IV. Earnings, Assets and Financial Position

71

V. Research and Development

73

VI. Events after the Balance Sheet Date

74

VII. Report on Risks and Opportunities Facing the Company

81

VIII. Report on Non-Financial Performance Indicators

83

IX. Forecast Report

85

Corporate Governance Report

Financial Statement of Voith AG
87

Consolidated Statement of Income

88

Consolidated Balance Sheet

90

Statement of Changes in Equity

92

Consolidated Cash Flow Statement

93

Notes to the Consolidated Financial Statements

121

Notes to the Consolidated Statement of Income

128

Notes to the Consolidated Balance Sheet

150

Notes to the Consolidated Cash Flow Statement

150

Notes to the Segment Report

156

Other Information

173

Responsibility Statement

174

The Voith Group and Its Shareholdings

Report of the Supervisory Boardof Voith AG for Fiscal 2008/09
Dear Reader,
The worst global recession since the stock market crash of 1929 and the steepest
decline in GDP since the Federal Republic of Germany came into existence have notleft the Voith Group unscathed. At three meetings—on October 13, 2008, on January 22, 2009, and on May 18, 2009—the Supervisory Board examined in considerable depth the impact on Voith of the dramatic worldwide slump. In three of Voith’sfour Group Divisions, the effects of the crisis became increasingly tangible in thecourse of the fiscal year, albeit to differing degrees.
The discussions conducted by the Supervisory Board were based on detailed reports
about corporate planning (including financial and investment planning in the economic crisis), the impact of the economic situation on the Group, the anticipated effects
on the four Group Divisions, developments in the company’s earnings and financial
position, and actions to be taken in the context of risk management and crisis management. Financial and capital expenditure planning for the current and subsequentfiscal years was approved unanimously. In addition, the Supervisory Board constantly engaged in detailed discussion of necessary adjustments in light of the varying
course of business in the Group Divisions.
The Chairman of the Supervisory Board was also kept constantly informed aboutsignificant developments and key decisions by the Board of Management. He

42 | Voith Annual Report 2008/2009

consulted regularly with the President and Chief Executive Officer on matters of material importance. For unavoidable reasons, one member of the Supervisory Board
attended less than half of its meetings in the fiscal year under review.
The Personnel Committee met once in the fiscal year under review, on January 22,
2009. There was no need to convene the Mediation Committee formed pursuant to
Section 27 Paragraph 3 of the German Codetermination Act (Mitbestimmungsgesetz,
MitBestG). The Balance Sheet Committee met on January 21, 2009, in the presence of the auditors who examined the annual financial statements. This committee
conducted an in-depth examination of the financial statements of both the consolidated Group and Voith AG for fiscal 2007/08, and of the report submitted by the auditors, Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart. In light of thecontinuation of the Fast Close project, the Balance Sheet Committee and the auditors also discussed in detail issues regarding the improvement of the year-end closure process. In addition, the Board of Management informed the committee of
improvements in cash management. Beyond this, the committee talked at length tothe head of the Internal Audit unit about the Group audit report prepared for the fiscal year under review. This discussion also covered organizational changes that theBoard of Management has since implemented. By no means least, the Balance Sheet
Committee’s discussions addressed the anticipated effect of Germany’s Modernization of Financial Reporting Act (Bilanzrechtsmodernisierungsgesetz, BilMoG) on thefinancial statements prepared by Voith AG in accordance with the German Commercial Code (Handelsgesetzbuch, HGB).
The Annual General Meeting convened on March 6, 2009, and formally approved
both the managerial conduct of the Board of Management and the monitoring activities of the Supervisory Board in fiscal 2007/08. The meeting also elected Ernst &Young GmbH Wirtschaftsprüfungsgesellschaft, Stuttgart, to audit the annual financial statements again in fiscal 2008/09. The Supervisory Board subsequently placed
the corresponding audit order.

Report of the Supervisory Board | 43

The auditor examined and granted its unqualified audit opinion on the accounting records, the annual financial statements and management report of Voith AG and theconsolidated financial statements and management report for the Voith Group as awhole at September 30, 2009. The consolidated financial statements were preparedin accordance with International Financial Reporting Standards (IFRS). In the courseof its audit, Ernst & Young GmbH paid special attention to “inventory valuation” and“purchasing,” in accordance with the mandate laid down by the Supervisory Boardin light of the requirement for IFRS accounting. The auditor further granted the following unqualified audit opinion on the report on relationships with affiliated companies:“The report on relationships with affiliated companies prepared by the Board of Management pursuant to Section 312 of the German Stock Corporation Act (Aktiengesetz,
AktG) is enclosed as Appendix 1 to our report. Based on the contracts, accounts,
correspondence, minutes of Supervisory Board meetings, receipts, invoices, costing
calculations, purchasing documents and other documents made available to us, we
performed spot checks to validate the statements made in said report about legaltransactions conducted with the controlling company and its affiliated companies infiscal 2008/09. Our examination led to no objections regarding the accuracy of theinformation provided therein.
“We concur with the assessment of the Board of Management regarding the prices
for deliveries and services invoiced by JMV and by companies affiliated with JMV. In
our opinion, the payment and other terms and conditions agreed are not inappropriate.
“The prices charged to JMV and its affiliated companies and the terms and conditions granted to these companies also line up with customary practice. Accordingly, the company suffered no disadvantages from legal transactions with the controlling companies and its affiliated companies referred to in the Board of Management’s
report for which compensation would be required pursuant to Section 311 AktG.”
In September and October 2009, the Board of Management and the Supervisory
Board submitted their reports on corporate governance and the corresponding
statements of compliance for fiscal 2008/09. Furthermore, the Supervisory Board

44 | Voith Annual Report 2008/2009

adapted its rules of procedure in line with legal changes resulting from the German
Modernization of Financial Reporting Act (BilMoG) and the German Management
Compensation Act (Vorstandsvergütungsgesetz, VorStAG). The Supervisory Board
also expanded the existing Balance Sheet Committee to form an Audit Committee.
At its meeting on December 21, 2009, the Audit Committee examined the annual
financial statements prepared for Voith AG and the consolidated Group as well as thereport on relationships with affiliated companies in light of the audit reports. Thereupon, the committee recommended that the Supervisory Board approve said financial statements, which it did at its meeting on December 22, 2009. Both meetings
were attended by the relevant member of the auditor’s Management Board and theperson who led the audit. They explained the material results of the audit and wereavailable to provide additional information. On the basis of its own examination, theSupervisory Board also approved the management report prepared for Voith AG and
the consolidated Group as well as the proposal for appropriation of net income. The
annual financial statements prepared for Voith AG and the consolidated Group havethus received formal approval. The Supervisory Board raised no objections to thedeclaration made by the Board of Management in the report on relationships withaffiliated companies.
The Supervisory Board wishes to thank the Board of Management, all other levelsof management, the employees of the Group and the representatives of the workforce for their exemplary commitment and successful endeavors in the fiscal year
under review—a year characterized by great uncertainty with regard to ongoing economic developments in all areas.
Heidenheim, December 22, 2009
Chairman of the Supervisory Board

Dr. Michael Rogowski

Report of the Supervisory Board | 45

The Supervisory Board

Dr. Michael Rogowski

Thomas Brezina*

Chairman,Member of the works council of the common entity

President of the Shareholders’ Committee of Voith,of companies of Voith Paper Heidenheim,

Heidenheim/Germany

Heidenheim/Germany

Gerd Schaible*

Ulrich Eckelmann*

Deputy Chairman,

Division Manager for Business, Technology,

Chairman of the corporate works council of Voith AG,

Environment on the Board of the Metalworkers’ Union,

Heidenheim/Germany

Frankfurt am Main/Germany

Walter Beraus*

Prof. Dr. Bernd Gottschalk

Secretary of the Metalworkers’ Union,

Member of the Board of Management

Regional Organizationof Mercedes-Benz AG (retired)

Baden-Württemberg Stuttgart,
Stuttgart/Germany

Florian Haupt*
Legal advisor,

Dr. Manfred Bischoff

Heidenheim/Germany

Chairman of the Supervisory Board Daimler AG,
Stuttgart/Germany

Dr. Alan Hippe
Member of the Executive Board of ThyssenKrupp AG,

Rudolf Brandhuber*
Chairman of the works council of Voith AG andVoith Dienstleistungen GmbH,
Heidenheim/Germany

46 | Voith Annual Report 2008/2009

Düsseldorf/Germany

Bernd Kauba*

Klemens Schweppenhäuser

Chairman of the works council ofMember of the Board of Management

Voith Industrial Services Mechanical Engineering,of Familiengesellschaft

Radebeul/Germany

J.M. Voith GbR,
Mannheim/Germany

Dr. phil. Nicola Leibinger-Kammüller
President of the Board of Management

Andreas Strobel*

of Trumpf GmbH + Co. KG,

1st Representative ofDitzingen/Germany

the Metalworkers’ Union, Heidenheim branch,
Heidenheim/Germany

Reinhard Leigraf*
Process technology engineer for special papers,

Angela Voith

Ravensburg/Germany

Doctor,
Herdecke/Germany

Dr. F. Oliver Porsche
President and CEO of Familie

Dr.-Ing. E. h. Jürgen Weber

Porsche AG Beteiligungsgesellschaft,

Chairman of the Supervisory Board

Salzburg/Austriaof Deutsche Lufthansa AG,
Cologne/Germany

Ute Schurr*
Chairwoman of the general works council

Dr.-Ing. E. h. Heinrich Weissof companies of Voith Turbo Heidenheim,

Chairman of the Board of Management

Crailsheim, Garching and Essen,of SMS GmbH,

Heidenheim/Germany

Düsseldorf/Germany*elected by the employees

The Supervisory Board | 47

Management Reportfor Voith AG I. Konzernstruktur undGeschäftstätigkeit
I. Group Structure and Voith is well-placed to face the future as a global provider of leading-edge technology andservices. The Group has consistently developed a portfolio of systems, products
Business Activities industrial
and services that serve five essential markets in all regions of the world. Corporate
strategy is focused on profitable growth. The stated aim is to preserve Voith’s
independence as a family-owned company.
Voith AG is headquartered in Heidenheim/Brenz, Germany. The Corporate Board ofManagement belongs to a management holding company which shapes and is
responsible for the overall strategy of the entire Group. Operating business is bundled infour Group Divisions, each of which is run as an independent company: Voith Hydro, Voith
Industrial Services, Voith Paper and Voith Turbo. In each Group Division, a headorganization oversees the activities of the independent subsidiaries. Corporate control isanchored in a value-based management philosophy that uses the return on capital
employed (ROCE) as the key measure of the company’s earnings power. Management
ratios are calculated on the basis of earnings before tax and interest (EBIT). All figures andreports submitted to the Board of Management are based on these management ratios.
Voith has 280 locations around the globe, maintaining an extensive network of
production, sales and service units on every continent on the planet. Historicaldevelopment made Europe and North and South America the regional focus of Group
activities in the past, although Asia already contributes 24% to its sales. The Voith Groupexplicitly aims to enlarge its footprint in the markets of Asia.
Today, Voith operates worldwide in the markets for energy, oil & gas, paper, raw materials,
transportation & automotive.

48 | Voith Annual Report 2008/2009

II. Wirtschaftliches Umfeld

THE GLOBAL ECONOMY IN RECESSION

II. Macroeconomic
Situation

As Voith’s fiscal year 2008/09 got underway (beginning on October 1, 2008), the world
was confronted by the worst economic crisis since the end of the Second World War.
Turbulence on the international financial markets triggered a global economic crisis thatvery quickly led to a dramatic slump in the real economy worldwide. Around the globe,
production and trade dropped sharply. The effects were most pronounced in industrializedcountries. The US economy, which depends heavily on domestic consumption, and theJapanese and German economies, both of which are dependent on exports of consumer
durables and capital goods, all felt the impact very keenly.
Signs of recovery in a handful of markets began to spread in late summer 2009. In
China, for example, growth picked up noticeably after a weak first half. In India, too, growthin the government’s current fiscal year will probably be higher than was expected at thestart of the year. For the year 2009 as a whole, however, negative economic growth isexpected for the entire global economy.
The economic situation in the USA, Japan and the eurozone countries remains very
tense. There is no indication that branches of industries that have a strong bias toward
exports and/or that respond slowly to economic cycles will turn the corner any time soon.
Nor are there currently any signs that it might become easier to source capital on thefinancial markets. This fact continues to influence the project financing terms that are so
important to the investments of Voith’s customers.

VARYING DEVELOPMENTS IN THE GROUP’S KEY MARKETS

Growth in global energy demand unbroken
In the period under review, the energy market was shaped primarily by two factors. One
was huge demand for clean, renewable energy—a trend that will increase in the longterm—especially in the world’s most populous economies. The second was the slowdown
in planning and award processes, above all for major power plant construction projects.
After a time lag, the energy market is responding in this way to the effects of the global
economic crisis. In the long run, however, growth prospects remain sound in this market
as the worldwide demand for energy is continuing to increase.

Management Report | 49

Oil & gas at the beginning of a crisis
The oil and gas market is generally sluggish in its response to economic cycles andreacted to the economic crisis only after a considerable delay. The first signs that themarket was cooling nevertheless became visible in the course of 2009. Oil and gas stillplay a pivotal role in the energy mix. Constant production levels and dwindling demand
nevertheless caused substantial inventories to accumulate. Many investment decisions
in the OPEC countries, for example, were thus postponed. Another downbeat year is to
be expected before a gradual recovery becomes apparent, mainly in the component
supply and service business.
Paper market bottoms out
In Western countries, paper production collapsed at the start of fiscal 2008/09. Many
papermakers in the USA, Japan and Europe responded by switching off their machines
for a time to absorb the plunge in sales. In Asia, projects were postponed until spring 2009
or beyond. Since summer, however, orders for new paper machines and substantiallybrisker service and consumables business have indicated that recovery is on the way. In
the long run, key stimulus for the paper market will emanate from the world’s growth
regions, where consumption of all types of paper remains significantly higher than the
average in traditional industrialized nations. At the same time, demand is growing in all
markets for new technologies that will make the paper production process more efficientwhile consuming less energy, pulp and water.
Raw materials market mired in crisis
The global recession and sharp decline in output brought an abrupt end to the multi-year
boom in the world’s raw materials market. Demand for cyclical materials such as coal,copper, nickel and zinc in particular collapsed very suddenly. Many mining companies
scaled production down or are halting it altogether in order to adjust their capacity to
weaker demand. Driven by momentum in demand from China, a modest recovery has set
in on the raw materials market. Its further development nevertheless hinges directly on
what happens to the world economy now.

50 | Voith Annual Report 2008/2009

Transportation & automotive markets patchy
These markets must be examined from different angles. Both the car and commercial
vehicle markets suffered dramatic implosions; nor is there any sign of a rapid turn for the
better in the Western markets in particular. In the private vehicle market, government
subsidy programs merely boosted sales in the short term. Demand for commercial
vehicles is expected to remain very flat, however. Compared to the decline in productbusiness, demand for technical services did not fall so sharply. On a brighter note, theprospects in the market for road- and rail-based local public transport remain sound. In
this market, government infrastructure projects are having the strongest impact, mostly
with a view to improving mobility in the world’s growth regions.

Management Report | 51

III. Geschäftsverlauf

III. Business
Development

VOITH HYDROVoith Hydro is a full-line provider of hydro power stations and, as such, one of the leadingindustry partners to power plant operators throughout the world. Hydro power is the only
form of renewable energy that is already able to produce a constant flow of electricity inthe quantities needed by industry and at competitive prices without government
subsidies. Hydro power will thus play a prominent role in the energy mix of the future.
A good year for hydro power
After a vigorous first half in which a sizeable volume of large projects was awarded, lessprojects were up for tender in the second half. This was due to the timing of customers’
project development activities. The global market for hydro power thus stabilized at thehigh level of the previous year. The situation at Voith Hydro reflects this picture. After aflying start to fiscal 2008/09, the award of major projects in particular leveled off noticeably
through the end of the period under review. In the Small Hydro segment (hydro power
plants that output less than 30 megawatts), the volumes awarded were significantly downin the fiscal year under review. The reason was that it was more difficult for customers andoperating companies to find the financing arrangements they needed. Even so, Voith
Hydro is very satisfied with the course of business in fiscal 2008/09.
Orders from all the world’s business regions
Voith Hydro landed two major projects in China. One of the country’s largest hydro power
plants (with a capacity of 12 600 megawatts) is currently being built on the Jinsha (“GoldSand”) River. “Jinsha” is the name given to the Yangtze River in its upper reaches. Voith
Hydro has been commissioned to supply generators and turbines. On the same river, theLiyuan hydro power plant, too, is under construction and should deliver a rated output of
2 400 megawatts as of 2012. For this project, Voith Hydro will supply four Francis turbines
and additional equipment.
In the USA, Voith Hydro will equip the Captain Meldahl Dam on the Ohio River withgenerators and turbines. This is already the fourth large rebuild order on the Ohio River tobe awarded to Voith by operator American Municipal Power in twelve months.
Acting in the context of a consortium, Voith Hydro was also able to secure two large
orders on the Rio Madeira in Brazil. Europe, too, has seen its hydro power market recover
vigorously. New projects are currently in progress on the Rio Sil River in Galicia/Spain, in
Esslingen/Germany and in Pernegg/Austria, for example.
Production and R&D capacity ramped up further
Voith stepped up efforts to expand its worldwide production facilities in the period underreview. Additional production capacity was created in growth markets. At the same time,

52 | Voith Annual Report 2008/2009

further measures were taken to improve employees’ technical qualifications to ensure thatorder handling is optimized.
The commissioning of a new generator production plant in Shanghai/China has
strengthened the Group Division’s position as one of the leading equipment suppliers
for hydro power plants in China and the rest of Asia. A new production facility in
Varadora/India was set up in fiscal 2008/09 to provide equipment to small hydro plants.
Production at the plant in Mississauga/Canada was extensively modernized. This site
delivers field coils for generators to all projects around the globe.
Besides expanding and modernizing its production capacity, Voith invested in more
research and development capacity, too. Extensive modernization of the Brunnenmühle
facility in Heidenheim/Germany has now been completed successfully, giving thecompany a global leading center for hydro power research and development.
Ocean energy—a new form of hydro power
The Group Division believes collaboration with energy company RWE will bring its tidal
current energy technology a crucial step closer to market readiness. Voith Hydro owns an
80% stake and RWE subsidiary RWE Innogy a minority interest of 20% in a joint venture
which, since July 2009, has been committed to advancing the development, production
and marketing of this innovative technology.
New company name
When Voith Siemens Hydro Power Generation was launched as a joint venture in April
2000, Siemens made its brand name available for a limited period. The right to use thisname expired in the period under review. Accordingly, the Group Division changed its
name effective April 1, 2009, and now operates as Voith Hydro. Share ownership in the
joint venture (a 65% stake for Voith and 35% for Siemens) remains unchanged.
Cooperation with universities expanded
Working closely together with universities and other establishments of higher education
is a long-standing tradition at Voith Hydro. Close collaboration with the Institute for
Thermodynamics and Energy Conversion at Vienna University of Technology in Austria
was agreed in the period under review, for example. Voith Hydro is providing long-term
funding for two research assistant posts to press ahead with basic turbine research at theinstitute. Together with the Institute for Fluid Dynamics and Thermodynamics at the
University of Siegen in Germany, Voith Hydro has commissioned a test bed for Wells
turbines. The facility will be used for research into noise emission behavior for this type of
turbine, which is used primarily in wave power plants.

Management Report | 53

VOITH INDUSTRIAL SERVICES

Voith Industrial Services provides technical services around the world to big-namecompanies in the automotive, chemicals, food, aviation and power generation industries,
for example. Its broad portfolio covers everything from maintenance and technicalcleaning to facility management, assembly and planning services and complex high-techengineering.
A year of ups and downs
In the period under review, Voith Industrial Services quickly felt the effects of the worldwide economic crisis. At service companies, the order situation is linked directly to theeconomic situation in the given customer industry. If industrial companies are operating
fewer working shifts, less services are needed to keep production running smoothly.
Even under adverse circumstances, however, the Group Division was still able to ramp
up its business in certain areas and convince new customers and segments of its
capabilities.
The Facility Services Europe and Facility Services Americas divisions provide many of
their services to the international automotive industry. For them, the global crisis in thisindustry largely shaped the course of business. While orders declined in Europe, theGroup Division was able to stand its ground in North and South America. General Motors
and Ford both placed orders for substantial packages of services at their North American
factories. In addition, new orders from Bosch, Ford and Tetra Pak were acquired in Brazil.
Thanks to its powerful market position as the leading provider of refinery services,
Process Services saw long-standing contracts renewed in the period under review. Shell,
another existing customer, also placed new orders. In the automotive industry, Hörmann
Industrietechnik successfully extended important servicing contracts in Poland, Hungary
and Germany, for example. A follow-on agreement was also signed with VW in
Kaluga/Russia. Development orders for customers such as Bombardier Transport and
EADS enabled Hörmann Engineering and CeBeNetwork to demonstrate their expertise asengineering service partners.
Voith Industrial Services Wind successfully advanced the internationalization of its
business in the fast-growing market for wind power facility maintenance. Initial orders forthe maintenance of wind parks were received from France, Spain and Poland. Voith
Railservices signed train maintenance and servicing agreements with one Dutch and one
Polish customer, continuing the pattern of growth experienced in the preceding years.
Structures for future growth now in place
At the start of fiscal 2008/09, Voith Industrial Services pooled its entire Asian business inthe Voith Industrial Services Asia division. This organizational change leaves the Group54 | Voith Annual Report 2008/2009

Division well placed to tap market potential for technical services in China and India inparticular. To this end, a new subsidiary based in Pune/India had already been set up in
the previous year and was consolidated for the first time in the period under review. Pune
is one of the production centers for the Indian automobile industry.
At the end of December 2008, Voith Industrial Services Holding GmbH acquired all theshares in DIW Deutsche Industriewartung AG held by EnBW Energie Baden-Württemberg(45.2%). As a result, DIW Deutsche Industriewartung AG and its subsidiaries are now
wholly owned by Voith. In fall 2007, EnBW had already announced the intention towithdraw from its equity investment and has now realized this option.
After the end of fiscal 2008/09, the subsidiaries Hörmann Engineering, Voith Industrial
Services Engineering and CeBeNetwork were brought together under the name Voith
Engineering Services. Bundling the Group’s contract engineering activities in this way
should in future enable Voith to optimize its penetration of this demanding segment. The
new division provides services such as designing products and components, analyzing
processes, planning shutdowns, and planning industrial plant and entire industrial
facilities. Personnel services for engineers in all industries round off Voith Engineering
Services’ portfolio.

Management Report | 55

VOITH PAPER

Voith Paper partners with and prepares the way for the paper industry. For many years, it
has been the only provider in the world to supply the entire papermaking process,including the necessary felts, from a single source—from pulp to finished paper.
Technology lead defended in a difficult climate
Mainly in Western sales markets, business in the paper industry was flat in the period
under review. Papermakers in Europe and the Americas rolled back their investments as
the economy plunged. Inventories of consumables were kept low, while renewal andmaintenance work was reduced to an absolute minimum. Initial signs of a market recovery
came from Asia in the second half of 2009, i.e. toward the end of fiscal 2008/09 at Voith.
Despite the pronounced decline in orders received, Voith Paper asserted itself well ina difficult market climate and gained a reasonable share of the few major projects thatwere up for tender. Attractive, large-scale projects were acquired both in Europe and in
emerging Asian markets such as China, India and South Korea. This achievement was
attributable to Voith’s impressive array of water-, energy- and pulp-saving technologies
for the papermaking process and to good customer relationships with a focus on longterm partnership.
The importance of modern environmental technology to the award of major projects
for the Paper Machines division was exemplified by an order placed by Perlen Papier AG,
Perlen/Switzerland, for delivery of a complete production line for newsprint paper. Voith
Paper’s environmentally friendly overall model for the new production facility ultimately
clinched the deal: Significantly improved energy efficiency will enable this facility toconsume approximately 10% less energy than comparable paper machines. Tamil Nadu
Newsprint and Papers Limited, one of India’s leading papermakers, ordered a production
facility for high-grade writing, printing and copying papers. A further order from the fastgrowing Asian market came from the Moorim Paper Group, which requested delivery ofa new production line for its plant in Ulsan/South Korea. These major projects werecomplemented by orders from Chinese customers for one midsized graphic grade paper
machine and two large board machines, plus a new production facility for South America
and a tissue machine for a Mexican customer.
Successful start-ups in Lynn/UK and Dunaújváros/Hungary were only two of many inthe period under review that once again demonstrated the importance to customers of
keeping the entire spread of paper technology—from stock preparation to the finishedroll—together under one roof. The result: Start-ups ahead of schedule, steep start-up
curves with record speeds, high-quality paper and very satisfactory print results—even in

56 | Voith Annual Report 2008/2009

the traditionally difficult phase immediately after a new paper machine has gone into
service.
Automation played a part in the major projects referred to above. Voith also stood its
ground well in the highly competitive direct business with automation solutions. While
Fabric & Roll Systems saw orders drop slightly year on year, the division neverthelessturned in a respectable performance in view of extended plant downtimes as a result offlat demand for paper, and of the corresponding decline in output.
New organizational structure to improve customer satisfaction
Voith Paper effected an extensive reorganization on January 1, 2009. The activities of what
used to be seven divisions have now been merged into four divisions: Fiber &Environmental Solutions, Paper Machines, Automation and Fabric & Roll Systems.
Preparation and planning for the roll-out of this new organizational structure alreadybegan in 2008. Voith Paper’s aim is to simplify processes and handle orders faster, more
efficiently and more flexibly in order to better serve the interests of customers—and to
sharpen its competitive edge.
For many years, Voith Paper has actively and selectively been working to complete its
offerings to the paper industry. The acquisition of PremiAir Technology, Inc., Montréal/
Canada, rounds off the Group Division’s product and service offerings in all areas of airtechnology for the cellulose, paper and tissue industry. PremiAir will be integrated in theVoith Paper Air Systems Group, which operates facilities in Bayreuth, Mönchengladbach(both in Germany) and Montréal/Canada.
Actively promoting training for papermakers
Active involvement in training and supporting university graduates for the paper industry
is an important issue. Voith Paper has for years accompanied research, lecturing andtraining activities in a broad spectrum of projects for paper engineers. Its long-standing,intensive and positive partnership with the Faculty of Paper Technology at Munich
University of Applied Science was extended still further in 2009. Voith is now instrumental
in funding a foundation professorship for the “Paper Technology” research study course,
whose content targets international paper engineering students.

Management Report | 57

VOITH TURBO

Voith Turbo is a recognized specialist that delivers high-tech products for use as drive
systems in the Group’s five core markets. It also develops mechanical, hydrodynamic,
electrical and electronic drive and braking systems for road, rail and marine use. In
addition, Voith Turbo is the leading provider of coupler systems for rail vehicles, including
high-speed trains.
Business development consolidated following economic crisis
In terms of its order intake in fiscal 2008/09, Voith Turbo was unable to repeat the record
performance that had been assisted by a large order from German railway company
Deutsche Bahn in the previous year.
At the Road division, year-on-year sales of retarders plunged by more than half. After
record earnings in the previous year, business with automatic transmissions for city busesstabilized in fiscal 2008/09. Voith underscored its strong market position by winning orders
for international projects in Europe, South America and the Middle East. The Dampers
product group primarily serves the agricultural engineering market and saw new orders
slide in the period under review. In its new business line, which sells engine components
such as exhaust turbochargers and TurboCompounds, the startup phase continued amid
difficult conditions.
Marine was clearly not immune to the negative trend in the shipbuilding market. One
notable order was received in the forward-looking market for mobile offshore construction
equipment. For the first time, Voith is thus fitting five Voith Radial Propellers in a specialpurpose vessel for the transportation and installation of offshore wind energy plants. The
propellers themselves were developed specially for this purpose.
At the Industry division, only variable-speed drives emulated the record businesspattern witnessed in the previous year. A large number of Vorecon orders came in forAustralia, Norway, Oman, South Africa and the USA. One other project that deserves a
special mention is the order for what is currently the world’s most powerful converter (58megawatts) for General Electric. The converter will be used in the customer’s test bed in
the USA. In the offshore wind energy plant segment, further 3.25-megawatt prototypes ofthe WinDrive were sold for installation in Germany’s first offshore wind park.
The Rail division experienced a modest anticyclical trend in global demand. Partly due
to infrastructure investment programs that are subsidized by the government, local
passenger transport is growing even as the recession causes cargo transportation toshrink. In its capacity as a supplier of key components to the international rail industry,
the Rail division was able to exploit business opportunities involving components forpassenger trains and rail-based local public transport systems. Of the many orders

58 | Voith Annual Report 2008/2009

received from all over the world, one highlight was an order for Voith final drives to be fitted
in the CHR3, China’s high-speed train, which will link Shanghai and Peking as of 2010.
Investing in production capacity lays foundation for growthOver the past two fiscal years, Voith has invested a total of € 40 million in the constructionof a new production facility for mechanical and electromechanical drive system solutions
for rail vehicles. Situated in Heidenheim/Germany, the brand-new facility testifies to thelong-term nature of the company’s forward-looking business policy. The governments inthe fast-growing Chinese and Indian markets and in the NAFTA countries are investing
particularly heavily to expand local and long-distance passenger rail transport. Voith aims
to leverage its solid starting position as a significant supplier to this market and hence
participate in its long-term development. The new plant provides optimal conditions torealize this goal.
Initiatives to optimize process flows
In the period under review, Voith Turbo launched numerous initiatives to improve internal
processes and organization. These initiatives include factory development projects
designed and commenced in the preceding years. Specialists have been appointed in alldivisions to accompany these projects and initiatives and keep them moving. Programs
to improve operational excellence are in full swing at all Voith Turbo sites around the world.
One successful pilot project in Hyderabad/India revealed very positive results within a few
months of implementation.
Innovation prize for WinDrive
Voith Turbo proudly took receipt of the Hermes Award for its WinDrive at this year’s
Hannover Messe trade show. The prize is one of the most coveted and widely respectedinternational awards for innovation. This accolade confirms the wisdom of the Group
Division’s research and development strategy, which aims to tap new areas of application
with hydrodynamic technology.
Professional partner for universities
In fiscal 2008/09, Voith Turbo signed a cooperation agreement with the Institute of Energy
Technology at the Technical University of Dresden/Germany. Voith is financing scientificposts for a group of researchers who are working on cooling, cryogenic and compressor
system projects.

Management Report | 59

IV. Ertrags- Vermögens- und Finanzlage

IV. Earnings,
Assets andFinancial Position

ORDERS RECEIVED

Broad portfolio softens impact of economic crisis
In fiscal 2008/09, Voith was unable to reproduce the previous year’s historic peak in
new orders, which were down by about 19% to € 5.0 billion (previous year: € 6.1 billion).
This figure compares with the level reported in fiscal 2006/07.
The Group’s portfolio strategy is reflected in this result. Whereas Voith conceded
declining volumes in the paper, raw materials and transportation & automotive markets—

Orders received€ in millions

all of which quickly feel the effects of economic downturns—the order intake in the energy
and oil & gas markets, which respond more slowly to such cycles, remained stable. This

6 092
5 132

enabled the Group as a whole to absorb the blow dealt by the global economic crisis
4 958

4 096

comparatively well.
The ERMO Group (Mainhausen/Germany), the CeBeNetwork Group (Bremen/
Germany), SIS Skandinavisk Industriservice A/S (Ringstedt/Denmark) and Newtec
Kemiteknik AB (Gothenburg/Sweden) were all acquired in fiscal 2007/08 but were fully
consolidated for the full 12 months for the first time in the period under review. These
companies and other, smaller acquisitions led to a one-time effect totaling € 84 million in

2005/06 2006/07 2007/08 2008/09

fiscal 2008/09. Adjusted for this effect, orders received stood at € 4.87 billion. At fiscal

Orders received total € 4 958 million
by division

Voith Turbo 26%

by region

Voith Hydro 26%

Europe excluding
Germany 29%

Germany 21%

Other 2%
Voith
Paper 27%

60 | Voith Annual Report 2008/2009

Voith Industrial
Services 21%

Americas 29%

Asia 19%

year-end (on September 30), the Group as a whole had orders worth € 5.0 billion on hand(previous year: € 5.1 billion).
Voith Hydro contributed € 1.3 billion to new orders (previous year: € 1.4 billion), a 5%
year-on-year decline in its contribution to Group orders.
At € 1 018 million, the volume of orders at Voith Industrial Services was slightly up on
the previous year (€ 983 million). Adjusted for the effects of first-time consolidation of the
ERMO Group (Mainhausen/Germany), the CeBeNetwork Group (Bremen/Germany), SIS
Skandinavisk Industriservice A/S (Ringstedt/Denmark) and Newtec Kemiteknik AB(Gothenburg/Sweden), all of which were acquired in fiscal 2007/08, the order intake
dropped by 4.6% to € 938 million.
Fiscal 2008/09 brought Voith Paper new orders totaling € 1.3 billion (previous year:

Orders on hand€ in millions€ 2.1 billion), a decline of 36%.
5 104

Orders received by Voith Turbo came to € 1.3 billion (previous year: € 1.6 billion). This
figure was 22% below the record level reported a year earlier, but still considerably higher
than sales in the period under review.

5 045

3 923
2 913

The even regional spread of new orders throughout the Group reflects Voith’sbalanced, broad-based footprint in all key business and growth regions in the world. In
fiscal 2008/09 21% of orders came from Germany, 29% each from the rest of Europe andthe Americas and 19% from Asia.

2005/06 2006/07 2007/08 2008/09

Management Report | 61

SALES

Sales slightly up on a year ago
Sales€ in millions

Consolidated sales for the Voith Group stood at € 5.1 billion in fiscal 2008/09 (previous year:€ 4.9 billion). The 3% increase in sales reflects the usual time-lag in this industry between

4 934
3 739

5 083

4 190

orders and sales; it thus mirrors the record order intake achieved in fiscal 2007/08.
These sales figures include the effects of full consolidation of the acquisitions referred
to in the section on “Orders received.” Adjusted for this one-time effect, sales stood at€ 5.0 billion.
Well-filled order books from previous years caused sales at Voith Hydro to jumpsignificantly 36% to € 1 085 million (previous year: € 800 million).

2005/06 2006/07 2007/08 2008/09

Sales at Voith Industrial Services totaled € 1 018 million, slightly up on the previous fiscal
year (€ 983 million). Again, adjusted for the one-time effect described under “Orders
received,” sales were actually down to € 938 million.
Voith Paper saw its sales decline by 12% to € 1.7 billion (previous year: € 2.0 billion).
Despite the difficult market situation, Voith Turbo increased its sales by 6% to a total of€ 1 232 million (previous year: € 1 161 million).
Similar to the trend in orders, consolidated sales, too, were split evenly across all theworld’s relevant regional markets. 22% of revenues came from Germany and 29% from therest of Europe. The Americas accounted for 23% of sales and Asia for 24% in the period
under review.

Sales total € 5 083 million
by division

Voith Turbo 24%

by region

Voith Hydro 22%

Europe excluding
Germany 29%

Germany 22%

Other 2%
Voith
Paper 34%

62 | Voith Annual Report 2008/2009

Voith Industrial
Services 20%

Americas 23%

Asia 24%

CAPACITY UTILIZATION

Personnel capacity aligned with market development
In fiscal 2008/09, Voith analyzed developments in the markets of relevance to its
business—energy, oil & gas, paper, raw materials and transportation & automotive—
quickly, continuously and comprehensively. With a view to medium- and long-termplanning needs, the personnel situation at each of the Group Divisions was carefully
assessed. Where necessary, appropriate action was taken swiftly but circumspectly andin line with the Voith corporate culture. Overcapacity was thus adjusted ahead of time inline with the anticipated market situation.
At September 30, 2009, Voith employed 39 329 people worldwide (previous year:
42 955). That is about 10% fewer staff than in the record 2007/08 fiscal year. Analysis of
the individual Group Divisions nevertheless reflects Voith’s necessary, market-driven
approach. The workforce was ramped up sharply in some Group Divisions and regions,whereas capacity had to be reduced quickly in other segments.
In light of its high order volume, Voith Hydro continued with the ongoing personnelbuild-up pursued in recent years. At the closing date, the Group Division employed 4 681
people (previous year: 3 643). Around the globe, 1 038 new posts were created and filledin the period under review—a gain of 28%.
Voith Industrial Services directly felt the full force of the global economic crisis,
especially the fallout from the automotive industry and its component suppliers. At thebalance sheet date, the number of employees was down 16% to 19 118 (previous year:
22 871). Customer industries were able to cushion the blow to some extent by using
temporary staffing adjustments such as short-time work in Germany. As a player in thetertiary industry, however, Voith Industrial Services was able to apply such options—bothin Germany and abroad—only to a limited extent.
Voith Paper had 9 500 people on its payroll at fiscal year-end (previous year: 10 548).
In light of downbeat market development overall and the prospect of weaker demand in
the international paper industry, capacity was scaled back quickly and prophylactically.
In Germany, short-time work was used to a small extent to help weather the crisis.
Worldwide, Voith Paper today employs 10% fewer people than it did at the close of fiscal
2007/08.
At Voith Turbo, staffing levels rose 2% to 5 428 (previous year: 5 307). Some of Voith
Turbo’s divisions (such as Rail) and regional markets (such as India) are still experiencing

Management Report | 63

growth. A selective personnel build-up ensued, while other divisions experienced
moderate headcount adjustments.
At September 30, a total of 16 790 people were employed in Germany and 7 691 in
the other European countries. For the reasons cited above, the workforce in both regions
thus shrank relative to the previous year by 10% and 20% respectively (previous year:
18 667 in Germany and 9 584 in the rest of Europe). In the Americas, staffing levels
remained virtually unchanged year on year at 11 004 (previous year: 11 109). In the growth
regions of Asia, the personnel build-up pursued in the previous years continued. By theend of the period under review, 3 647 people were employed by Voith in this region(previous year: 3 399), equivalent to a personnel build-up of 7%.
Irrespective of the global economic crisis, Voith once again gave young people thechance to learn and develop in fiscal 2008/09. As in recent years of strong growth, theGroup once again trained considerably more youngsters than it needs for its own
purposes. All in all, 1 196 apprentices and students were employed at Voith facilities infiscal 2008/09.

Employees total 39 329
by division
Voith Industrial
Services 48%

by region

Voith Hydro 12%

EuropeexcludingGermany 19%

Germany 43%

Other 2%
Voith
Paper 24%

64 | Voith Annual Report 2008/2009

Other 1%
Voith Turbo 14%

Americas 28%

Asia 9%

CAPITAL EXPENDITURE

Investment activity continues unchanged
In the period under review, Voith resolutely continued to invest substantially to sharpen its
innovative edge. In doing so, the Group once again underscored the long-term, forwardlooking nature of its corporate planning strategy.

Investments and depreciation€ in millions
Investments

The volume of capital spending totaled € 255 million in fiscal 2008/09 (previous year:

Depreciation
281€ 281 million), equivalent to 5.0% of consolidated sales (previous year: 5.7%). The sum of

255

these investments was € 101 million higher than the value of depreciation and amortization,
which came to € 154 million. Of the € 154 million figure for depreciation and amortization,€ 3 million are included in the non-recurrent result. Details of how capital expenditure was

193
167
118

128

144

151

split across the Group Divisions is provided in the segment information by business units(see the notes). Regionally, Germany accounted for 53% of capital spending, the rest ofEurope 11%, the Americas 20% and Asia 16%.

2005/06 2006/07 2007/08 2008/09

The money was channeled into technologies and production facilities to make Voith
more competitive in the growth markets and regions of tomorrow.
The future of the energy market belongs to technology solutions for renewable energy
sources such as hydro power. In the period under review, Voith Hydro, one of the leading
full-line providers of hydro power plants, invested in ramping up its generator production
operation in Shanghai/China, in setting up a factory for small hydro power systems in
Varadora/India, and in modernizing its production facility for generator parts in
Mississauga/Canada. Money was also invested into extensive modernization of Voith
Hydro’s global research and development center at what is known as the “Brunnenmühle”
in Heidenheim/Germany.

Management Report | 65

Personal mobility is one of the global megatrends in the 21st century. Voith Turbo is asignificant supplier to this market. Its leading-edge technology thus plays an importantpart in expanding local and long-distance passenger transport. A new transmission plant
for rail vehicles is therefore being built in Heidenheim/Germany. The € 40 million spent on
this facility will prepare the company’s production capacity in Germany for further growthin this segment.
Environmentally friendly technologies that save precious resources are becoming
increasingly important in papermaking. In the period under review, Voith Paper therefore
invested in a new production hall and optimized processes at its Ravensburg site to staycompetitive and maintain its position as technology leader in the Fiber & Environmental
Solutions division.
China is one of the most important regional markets for the future of the paperindustry. In the course of fiscal 2008/09, a substantial sum was invested to complete Voith
Paper City in Kunshan, thus improving the Group Division’s ability to gain a stronger
foothold in the Chinese and Asian markets.

Investments total € 255 million
by division
Voith
Paper 36%

by region

Voith
Turbo 31%

Voith Industrial
Services 5%
Voith
Hydro 23%

66 | Voith Annual Report 2008/2009

Other 5%Germany 53%
EuropeexcludingGermany 11%

Americas 20%

Asia 16%

FINANCIAL INVESTMENTS AND PARTICIPATING INTERESTS

Apart from the activities discussed above under “Business Development,” no major
acquisitions were effected in the period under review.

NET INCOME ON A GOOD LEVELThe Group earned net income of € 77 million in fiscal 2008/09 (previous year: € 144 million)in spite of the difficult global economic situation.
Total output edged up to € 5 078 million (previous year: € 5 058 million) as the large
volume of orders accumulated in previous periods was worked off. A number of major
products with significant order volumes were handled in the industrial systems segmentin particular.

Net income€ in millions

246
179
144
77

Compared to the previous year, a lower volume of material-intensive add-on services
coupled with lower prices on sourcing markets reduced the ratio of the cost of materials

2005/06 2006/07 2007/08 2008/09

to total output. The cost of materials was € 88 million lower than in fiscal 2007/08,
declining to € 2 129 million (previous year: € 2 217 million). On the other hand, the ratio of
personnel expenses to total output remained virtually unchanged. Personnel expenses
rose only slightly to € 1 768 million (previous year: € 1 740 million).
At € 324 million in fiscal 2008/09, operating profits (before adjustment for the nonrecurring result) improved by € 40 million year on year (previous year: € 284 million).
The non-recurring result was minus € 98 million (previous year: minus € 8 million).
Adverse economic conditions made it necessary to launch measures to adjust staffing
capacity in both production and administration. These steps led to one-time charges ofminus € 59 million at Voith Paper (previous year: minus € 9 million), minus € 18 million atVoith Turbo (previous year: € 0) and minus € 21 million at Voith Industrial Services (previous
year: € 1 million). The action taken by all three of these Group Divisions was a forwardlooking response to future market developments. The aim is to bolster profitability andcreate the conditions to keep the Group competitive and cost-effective in the long run.
Some of the measures launched had already been implemented by fiscal year-end.
Planned personnel adjustments will be largely completed over the next two years.
Interest income and expenses were both down as interest levels shrank worldwide. In
spite of a larger volume of cash and cash equivalents, interest income was thus down
€ 7 million to € 28 million (previous year: € 35 million). Interest expenses declined to minus

Management Report | 67

€ 83 million (previous year: minus € 91 million). Year on year, the cost of what are
essentially floating-rate loans and bonds diminished, as did losses on marketablesecurities held as short-term assets. The interest result, which nets interest expenses
against interest income, remained more or less unchanged at minus € 55 million (previous
year: minus € 56 million).
Our present assumption is that certain assets held for sale are permanently impaired.
The corresponding € 20 million write-down (previous year: € 0) was recognized in profit
and loss. All in all, the other financial result totaled minus € 18 million (previous year:€ 1 million).
Broadly speaking, changes in the other items in the consolidated statement of income
were in line with business development.

STABLE ASSET AND CAPITAL STRUCTURES REMAIN INTACT

The structure of assets and capital reflected in the consolidated balance sheet for
the Voith Group remains healthy. Total assets rose to € 5 369 million (previous year:€ 5 148 million).
Non-current assets were up to € 2 259 million (previous year: € 1 962 million). This
increase was due primarily to further brisk capital spending on intangible assets, property,
plant and equipment and marketable securities. The reclassification of marketablesecurities from current to non-current assets also contributed to this year’s higher figure.
Largely as a result of this reclassification, marketable securities held as non-current assets
were up € 174 million to € 188 million (previous year: € 14 million).
Since the Group has sufficient liquidity at its disposal, there are no plans to sell off anyof these marketable securities over the next 12 months.
Conversely, current assets were down slightly to € 3 110 million (previous year:€ 3 186 million). Inventories, trade accounts receivable, marketable securities and cash
and cash equivalents were largely responsible for the change in this item.
In particular, improvements in working capital management reduced inventories by€ 91 million to € 833 million and scaled trade accounts receivable back to € 960 million(previous year: € 1 142 million).

68 | Voith Annual Report 2008/2009

In our industrial systems business, the decline in receivables is due partly to the billingof long-term construction contracts and partly to higher receipts of customer advances.
The latter were netted against existing receivables and thus reduced receivables
outstanding.
The decline in marketable securities is explained essentially by the reclassification to
non-current assets described above.
In light of persistent uncertainties on the financial markets, it is all the more important
to maintain a stable liquidity position. Accordingly, cash and cash equivalents wereboosted by € 383 million to € 923 million (previous year: € 540 million). This was done bytaking on corresponding financial liabilities.
A further € 300 million was added to the existing € 300 million bond and a note loan
totaling € 150 million was acquired in order to increase liquidity. As a result, non-current
liabilities rose to € 2 077 million (previous year: € 1 647 million).
Current liabilities declined by € 302 million to € 2 338 million (previous year: € 2 640
million).
Of these liabilities, current financial liabilities were € 66 million lower than in theprevious year and stood at € 117 million (previous year: € 183 million). This decline wasdue to settlement of individual loans in order to give precedence to the longer-term
financing alternatives described above.
Trade accounts payable dropped to € 457 million after a figure of € 539 million in fiscal
2007/08 which, relative to the preceding years, was exceptionally high. Other liabilities
declined to € 1 318 million (previous year: € 1 514 million), mainly because higher customer
advances were deducted from trade accounts receivable (see above) and because thenegative market values of derivative financial instruments were lower.
At September 30, 2009, Group equity totaled € 954 million (previous year: € 862
million). The equity ratio was 17.8% (previous year: 16.7%). Alongside net income, effects
from the valuation of marketable security positions came to € 41 million (previous year:
minus € 46 million) and also had a positive impact on the amount of equity. Dividend
payouts totaling € 34 million (previous year: € 22 million) were deducted from equity. The
equity figure still includes the profit participation rights totaling € 76.8 million that were
issued in fiscal 2006/07. In the period under review, further profit participation rights
totaling € 6.6 million were issued. In line with the criteria specified in IAS 32, these rights
are also carried as equity. More details of equity are shown in the statement of changes
in equity.

Management Report | 69

POSITIVE CASH FLOW OVERALLIn spite of the adverse economic circumstances, the Voith Group was still able to generate
positive cash flow of € 304 million (previous year: € 431 million) from operating activities
in fiscal 2008/09. The change in net working capital—in particular the reductions ininventories and trade accounts receivable—contributed to this result.
Net cash used in investing activities increased to minus € 345 million (previous year:
minus € 330 million). This change is attributable to the sustained high volume of investment
in new plants, plus the purchase of additional marketable securities. A large proportion of
the outflows invested in the shares of subsidiaries resulted from the Group’s acquisition of
the remaining 45.2% stake in DIW Deutsche Industriewartung AG, Stuttgart/Germany.
Net cash provided by financing activities totaled € 411 million (previous year: a net
outflow of € 17 million). This change was caused largely by the issue of further bonds andthe acquisition of additional liabilities to banks, as discussed above.
Total cash flow amounted to € 370 million (previous year: € 85 million). More details of
cash flow are provided in the consolidated statement of cash flows.

70 | Voith Annual Report 2008/2009

V. Forschung und Entwicklung

FOCUS ON TECHNOLOGIES FOR THE MORE EFFICIENT USE OF RESOURCES

V. Research andDevelopment

Voith can only maintain a future-proof portfolio if it continually develops innovative
products and services. Global megatrends must be spotted early on so that solutions to
the problems and challenges our customers will face in future can be anticipated. Aware

Research & development € in millionsof this, the Group refused to scale back its spending on research and development in the
period under review, despite the adverse market climate. On the contrary, its R&D spend
was actually slightly higher than a year earlier at € 254 million (previous year: € 250 million).

250
182

254

202

This figure is equivalent to 5.0% of consolidated sales (previous year: 5.1%).
Voith Hydro focused part of its development activities on pump turbines. More andmore electricity is now being generated from wind and solar power, both of which aredependent on weather conditions and the time of day. Accordingly, pumped storage
methods are taking on increasing significance. At present, this technology is the only way

2005/06 2006/07 2007/08 2008/09

to store large volumes of electrical energy so that it can be made available for commercial
applications when it is needed. In other words, pumped storage systems help keep power
networks balanced and stable, guaranteeing a steady flow of electricity round the clock.
Topographical factors and economic feasibility considerations are increasingly
necessitating greater heads (drops) where new pumped storage power plants are built.
Voith Hydro is therefore conducting intensive research into ways to optimize hydraulicsystems that can cope with these conditions, thereby laying the foundation for further
potential applications.
To service the fast-growing hydro markets of Asia, further development of large vertical Pelton turbines was another key focus. This technology can already cope with drop
heights of up to 1 200 meters. Carefully targeted use of simulation techniques at Voith
Hydro’s “Brunnenmühle” research center significantly improved the performance specifications for these machines.
For many years, Voith Hydro has been deeply committed to exploring new ways toharness the power of water in order to generate power. In doing so, it has concentrated
heavily on the still largely untapped possibilities afforded by ocean energy. In fiscal
2008/09, work on a pilot turbine with a rated output of 110 kilowatts and a rotor diameterof just under six meters was brought to a successful conclusion. By the end of the period
under review, the machine was ready to run and was already on the way to South Korea,
where the prototype turbine will be lowered to the seabed for testing.
As in the previous year, Voith Paper again devoted its R&D activities to thedevelopment of new technologies to save energy, pulp and water. Its aim is to make thepapermaking process more environmentally compatible and enable resources to be used
more efficiently. As a result, Voith Paper is discovering solutions that give due account toecological considerations, but that also yield significant economic benefits in the form of
cost savings for customers.

Management Report | 71

The Group Division’s efforts to research and develop resource-saving products for thepaper industry were rewarded with an international prize in fiscal 2008/09. For its
development work on technologies to save water, Voith Paper was presented with theGreen Apple Award by Britain’s Green Organisation.
LowEnergyFlotation is a new deinking flotation system for wastepaper recycling plantsthat can slash power consumption by as much as 50% compared to conventional
systems. The new system can be fitted in both new and existing plants. The first rebuild
project was tested successfully at the start of 2009. In the course of the year, two further
stock preparation plants fitted with the LowEnergyFlotation system were then sold in
China and Europe.
A new automation system, too, is improving efficiency in the production process. The
newly developed Voith LSC QuantumSens is the first sensor that measures paper
thickness with no contact whatsoever. Marks on the paper surface and tears caused by
the measuring systems used to date are thus a thing of the past.
In the period under review, all Voith Turbo divisions concentrated their development
efforts on environmentally friendly systems that should help use resources such as fuelmore efficiently, reduce energy consumption and diminish noise emissions.
In collaboration with wind power plant manufacturer BARD, Voith Turbo Wind has
started work on a 6.5-megawatt (7-MVA) offshore wind farm. The Voith WinDrive will be
the central component in the turbines’ drivetrain. Output will be up to 6.5 megawatts. In
the years ahead, these wind power systems are to be deployed in various offshore
projects for the BARD Group. Like WinDrive, the new turbocoupler 274 TN-X is also
improving the efficiency of wind power systems. This innovation optimizes the rotor
position to face the wind up to 30 times an hour, depending on weather conditions. Evenin high winds, this hydrodynamic technology has proven to be robust and reliable—
properties that make it particularly well suited to offshore applications.
Voith Turbo’s Road division continued work on developing its hybrid application
DIWAHybrid in the fiscal year under review. Building on the proven DIWA technology, thekey strength of this parallel hybrid transmission system is its universal versatility, especiallyfor buses that run at high average speeds. For buses that operate in heavy urban traffic,
Voith is developing ElvoDrive, a serial hybrid transmission system. The core component
in either solution is a converter developed specially for hybrid applications in buses. VIAB,
the integrated drive and braking element launched successfully in the previous fiscal year,
was further improved for a new vehicle series.
Ongoing development of resource-saving components for rail traffic applications
continued at the Rail division. The Voith Hydrobrid is a hybrid drive system designed forrailcars and locomotives. Depending on requirements, the system can be implemented in
micro-hybrid, mild-hybrid and full-hybrid versions, all of which can be retrofitted in existingvehicles without difficulty. EcoScout, the newly developed driver assistance system, is acontrol and display device. Integrated in the vehicle, it supplies train drivers with useful72 | Voith Annual Report 2008/2009

recommendations. Tests have shown that using this system can reduce fuel consumption
by as much as 20%. Also in the period under review, the Voith Maxima 40 CC diesel
locomotive was licensed by the German railway authorities to go into service pursuant to
Ruling EBA 08-L08 K 001. This brings development of Voith’s first ever locomotive—themost powerful diesel engine on Europe’s normal gauge network, with a rated output of 3
600 kW (approx. 5 000 hp)—to a successful conclusion. Steps to obtain a license for theVoith Gravita, a locomotive designed for heavy-duty shunting and light freight service,proceeded according to plan.
R&D activities at the Marine division centered around development of the new Voith
Radial Propeller. This new application of the Voith Schneider Propeller was developed foruse in special-purpose vessels used in the transportation and installation of offshore windplants.

VI. Nachtragsbericht
After fiscal 2008/09 had ended, Voith Paper acquired the whole of Voith Paper Technology(India) Ltd., headquartered in Calcutta/India, from its long-standing joint venture partner
Larsen & Toubro. The transfer of equity (50%) had been planned well in advance and tookeffect on October 1, 2009. This move accommodates the growing importance of the

VI. Events after
the Balance
Sheet Date

Indian paper market and sharpens Voith’s competitive edge on the ground.
Apart from this transaction, no significant events have occurred since the end of the period
under review.

Management Report | 73

VII. Bericht über die Risiken und Chancen des Unternehmens

VII. Report on
Risks and
Opportunities
Facing theCompany

RISKS

Risk and Quality Management
As a global enterprise, Voith is exposed to many and varied risks. To guard the Groupagainst risks that could threaten its survival and/or that of its companies, it operates aconsistent and binding Group-wide system of risk and quality management.
Existential threats are defined as aggregate risk potential that threatens more than
50% of equity or more than 10% of sales.
Voith’s risk management activities are condensed into a comprehensive risk management
system whose key principles are as follows:•

Reduce risk potential and the probability that risks will be realized in order to increase
the value of the Group and its companies.

•

Comply with the legal requirements placed on listed stock corporations.

•

Apply practicable rules in order to meet the requirements placed on corporate
management.

•

Systematically encourage a professional, entrepreneurial mindset on every level,
actively involving every individual employee in the process.

•

Apply existing management and control instruments and link these to the managementof technical risks.

Risk Management System
The Voith Group operates a distributed risk management system. Responsibility is
assigned in a way that accommodates the varying risk profiles that exist on all levels andin each different function.
The risk management process distinguishes between two classes of risks: risks to theGroup and risks to performance. The process itself breaks down into four steps:
Risk identification
Voith constantly monitors macroeconomic developments, developments in the industries
it serves and internal business processes that could affect the situation of the Group. A
catalog of risks helps management to identify individual risks.

74 | Voith Annual Report 2008/2009

Risk analysis and assessment
The risks thus identified are assessed in terms of the potential damage they could do andthe probability—expressed as a percentage—that they will be realized. Wherever possible,
the scope of potential damage is quantified as a cost factor. Worst-case scenarios are
assumed and their impact on the Group’s financial situation is examined.
Risk control
Analysis and assessment of the identified risks gives Voith’s management the data itneeds to decide whether risks can be avoided, reduced or diversified by suitable actions
or transferred by signing appropriate agreements, or whether they have to be acceptedand contained by means of optimized processes and controls.
Risk monitoring and reporting
A multitiered set of controlling and reporting tools helps the Board of Management toanalyze risks and take well-founded decisions.
A distinction is drawn between two classes of risks: risks to the Group and risks toperformance. These classes break down as follows:
Risks to the Group:a) External risksb) Management risksc) Financial risksd) Infrastructure risks

Risks to performance: a) Contractual risksb) Technical risks

Management Report | 75

Risks to the Group
External risks
In fall 2009, the world’s economy remains in a phase of recession. Voith’s products,
technologies and services are supplied to the markets for energy, oil & gas, paper, rawmaterials, transportation & automotive. The future development prospects for thesemarkets vary very considerably. Those industries that respond very quickly to shifting
economic cycles—such as paper, raw materials, transportation and automotiveengineering—were hit fast and very hard by the global crisis. On the other hand, businessdevelopment in the energy and oil & gas markets, which are slower to respond, remained
stable. Voith has a diversified portfolio in terms of both content and regions. It also boasts
healthy finances and a stable liquidity position. Accordingly, the Group believes it is wellable to master the forthcoming challenges of another year of recession.
There is no evidence of perceivable, significant external risks at the present time.
Management risks
Voith has developed and operates a reliable reporting system that also encompasses
its risk and quality management systems. Group accounting plays a pivotal role in thissystem and was migrated to International Financial Reporting Standards (IFRS) in fiscal
2005/06.
No risks of material Group management errors are perceivable at the present time.
Liquidity and financial risks
The Group’s diversified financial structure is designed to safeguard long-term stability. In
the fiscal year under review, Voith AG topped up an existing bond to ensure the availabilityof extra liquidity. Additional free credit lines complement a liquidity position that is
sufficient at all times. This enables the Group to pursue sustainable growth and remain
flexible enough to respond to changes in the market environment.
The investment grade rating given by Moody’s Investors Service to Voith AG when its
first bond was issued in 1999 was confirmed with Baa1 in February 2009. The outlook
was switched from “stable” to “negative.”
Voith possesses a multi-asset portfolio for which an external advisor handles risk
monitoring based on a defined value-at-risk budget. In addition, the Group still holds what
are mostly isolated direct investments. Fluctuations in the value of these investments as
a whole are recognized directly in equity. Market price losses are recognized in profit andloss only if there is objective evidence that the fair value of an investment is sustainably
or significantly impaired. The criterion “sustainable” is met if the impairment lasts longer
than 12 months. If the fair value of the investment falls more than 30% below its cost, thisis regarded as a significant impairment. It should be noted that all investment decisions

76 | Voith Annual Report 2008/2009

are based on a fundamental strategy. In the event of conspicuous fluctuations in shareprices, outstanding stock market price risks are analyzed immediately and appropriate
measures agreed.
To contain risks to cash flows in different currencies, defined foreign currency
management procedures are applied consistently throughout the Group. As a basic rule,
all Group companies are required to hedge foreign currency items when these occur.
Voith uses a variety of derivative financial instruments such as forward exchange
contracts, currency options and interest rate swaps to hedge transactions. These
instruments are defined and documented at the start of a hedging relationship in line withthe goals of corporate risk management.
To guard against political and economic risks associated with the deliveries andservices provided by the Group Divisions, the Group buys commensurate insurance fromgovernment export credit insurance agencies, from the private-sector insurance market
and from banks. The Group also maintains adequate provisions to cover all otheroperating risks.
No particular liquidity or financial risks are perceivable at the present time. For more
information, please refer to the notes to the consolidated financial statements.

Infrastructure risks
IT risks
Voith’s own Group IT unit ensures that reliable data processing services are provided fromits own data center. The IT experts at Voith manage the whole IT infrastructure for theentire Group and also maintain the specific application systems used by each Group
Division.
Human resources risks
Voith competes with other international players for the services of its highly qualified
specialists and managers. Training and development programs, international careerdevelopment prospects, performance-linked compensation systems, a family-friendly
human resources policy and flexible working hours all help to keep Voith’s staff highly
motivated—a fact evidenced by the Group’s traditionally very low fluctuation rate.
Consistent with its commitment to good corporate governance, Voith AG has
formulated a corporate code of practice whose behavioral standards are valid for every
employee in the Voith Group. The code includes guidelines for the behavior of employees
to avoid corruption in their business dealings with third parties. Voith supports all efforts
to contain and eliminate corruption worldwide and calls for integrity in a context of faircompetition. The guidelines and values defined by the Board of Management are clear

Management Report | 77

and unambiguous. They are binding for all Voith employees worldwide and provide clearcut rules of behavior toward third parties such as business partners, competitors, politicalparties and government authorities. Compliance with these principles is monitored by theGroup’s Compliance Committee.
Environmental protection risks
All production processes in the Voith Group satisfy strict corporate guidelines on quality,
risk management, industrial safety and environmental protection. An integrated
management system monitors permanent compliance with these guidelines and ensuresthat both production and products consistently meet the same high quality andenvironmental standards.
No particular risks relating to the Group’s infrastructure are perceivable at thepresent time.

Risks to PerformanceContractual risks
Regular checks ensure that adequate provisions are set aside to cover the legal risks thatexist throughout the Group. In particular, these include risks relating to warranties, liability,
contractual penalties, guarantees and the possibility of inadequate or incorrect pricecalculations. Liability and property insurance in line with standard industry practice istaken out to cover the possibility of damages and/or liability risks.
Appropriate provisions are made for special risks arising from existing contracts,
insofar as said risks can be reliably quantified.

Technical risks
Innovation-related risks
The future profitability of the Voith Group hinges on its ability to develop marketableproducts and services and use the most modern production technologies and service
processes. The Group invests large sums of money to further improve and refine existing
technologies, and to research and develop new products, systems and services. With
more than 10,000 patents to its name and over 400 new ones filed on average every year,
Voith ranks as one of the most innovative companies in the industries it serves.
Sourcing risks
Sourcing risks are minimized to the greatest extent possible. The processes by which
suppliers are selected and dealt with are specified in writing. Moreover, a permanent,

78 | Voith Annual Report 2008/2009

Group-wide risk management process has been implemented to identify delivery risks
and the risk of insolvency among suppliers at an early stage. A dual sourcing policy largely
safeguards the supply of basic materials to Group companies by third parties. Back-up
strategies are in place in case suppliers who provide core components for the Group’sbusiness processes should default. In fiscal 2008/09, Voith once again used every meansat its disposal to contain the risks posed by cost increases. It did so by concluding a mix
of fixed-price contracts and other hedging arrangements.

Overall Risk
To the best of our knowledge at the time when this report went to press, there is nomaterial threat to the continued existence of the Voith Group.

OPPORTUNITIESMacroeconomic Opportunities
Voith ranks as a leading player in the business lines and markets to which it is actively
committed. Its product and service offerings contribute leading-edge technology thathelps solve problems relating to global megatrends such as renewable energy, personal
mobility and outsourcing. In addition, Voith supplies products and machinery that are
urgently needed to develop the economic infrastructure in emerging countries. This
portfolio includes paper machines, hydro power plants, products and systems to develop
local public transport and rail transport networks, products for use in power plants, steel
mills and raw materials mining contexts, and technical services for new factories and highperformance industries. Even under difficult macroeconomic conditions, this market
constellation still presents Voith with opportunities for further profitable growth.

Strategic Opportunities
Global orientation
At Voith AG, internationalization is a long-standing tradition. The company began shipping
paper machines to Russia as far back as 1897, and installed the first hydro power plantin China in 1909. Today, Voith has in-house production facilities and sales centers at moreManagement Report | 79than 280 locations in over 40 countries in all regions of the world. This global orientation
gives the Group the chance to participate in dynamic business development with its own
capacity on the ground in the world’s fast-growing regions.
Long-term corporate development to defend independence
The Voith company has been owned by the Voith family since its inception in 1867. To thisday, the core concern of the Board of Management, the Supervisory Board and theshareholders alike is to create and expand a successful company and pass it on in better
shape than ever to the next generation. Thanks to a moderate dividend policy, Voith has
sufficient financial resources to fuel continuous, attractive growth, the trajectory of which
can be planned over extended periods, irrespective of cyclical economic fluctuations.

80 | Voith Annual Report 2008/2009

VIII. Berichterstattung zu nicht-finanziellen Leistungsindikatoren
Voith is a family-owned company whose business model attaches appropriate importanceto social factors besides the need to achieve economic goals and increase the value ofthe company. Satisfied customers are the cornerstone of business success. As such, they
lay the foundation on which Voith can offer attractive long-term career and development
prospects to its people. The safety of employees in the context in which they work for
Voith is of paramount importance to the company. Accordingly, extensive measures and

VIII. Report on
Non-Financial
Performance
Indicators

initiatives devote considerable attention to this key issue.

Research and Development
In many areas relating to environmentally friendly technologies, products and processes,
Voith stands out as both the technology and opinion leader. This is true in the processingof wastepaper for paper production, for example, in hydro power technology, and ininnovative services for the wind power industry. To defend and improve on this position,
the company sharply focuses all its R&D activities on technologies that use resources
economically and are kind to the environment. In fiscal 2008/09, Voith once again beganwork on a whole series of ground-breaking products and system solutions. (For moredetails, refer to section V, “Research and Development,” in this management report.)
Working on these technologies lays the foundation for the Group’s continued
successful business development in the future. It also helps protect the world around us,
as well as creating high-quality jobs.

Production
All production processes in the Voith Group satisfy strict corporate guidelines on quality,
risk management, industrial safety and environmental protection. An integrated
management system monitors permanent compliance with these guidelines and ensuresthat both production and products consistently meet the same high quality andenvironmental standards. The corporate guidelines document a consistent understandingof the entire Group, thereby laying the basis for company-specific occupational health andsafety and environmental management systems.
Internal and external audits in line with international standards verify the applicationand effectiveness of these management systems.

Management Report | 81

Environmental Protection Officers are responsible for assessing environmental impact.
Their job is to regularly measure and assess how the activities conducted at Voith sites
directly and indirectly affect the environment. Their main focus is on:• Examining emissions in accordance with the relevant national laws and regulations• Assessing the efficiency of energy and water consumption• Monitoring wastewater and the wastewater system• Handling waste management
In the course of the current fiscal year, efforts are being taken to systematically collate andpool all the environmental data that is currently distributed throughout the Group. Once
this has been done, the next step will be to define specific targets for further improvement
and put together packages of actions to achieve these goals.

Products
Many Voith technologies—such as hydro power plants, systems for local public transport,
drive systems for wind turbines and wastewater treatment plants—already play animportant part in making business more environmentally friendly and helping to conserve
resources. In close collaboration with its customers, Voith develops extensive
modernization and servicing models to ensure that installed systems stay leading-edge
throughout their entire life cycle—in some cases 30 or 40 years or more.
In addition, Voith actively seeks dialog with all relevant stakeholders in the context ofnumerous associations and initiatives. Wherever possible, the Group gives its practicalbacking to the further development of environmental standards and sustainability criteria.
Voith Hydro, for example, does this in its capacity as a member of the International
Hydropower Association (IHA).

Recycling
In recent years, the concept of recycling has become increasingly important in the context
of long-lasting capital goods, too—the market in which Voith primarily operates. The
Group rises to this challenge by deploying technologies that allow Voith products to be
returned for reuse/recycling at the end of their life cycle, ideally creating added value forthe customer in the process. One pilot project at Voith Paper is indicative of what wemean: The dry fabrics that drain water off the web in the papermaking process are now
recycled. During the recycling process, the energy given off is harnessed and put to gooduse.

82 | Voith Annual Report 2008/2009

IX. Prognosebericht

No Sign of Stimulus to Drive a Sustainable Upswing Yet

IX. Forecast Report

In fall 2009, the global economy continues to struggle with recession. Although indicators
suggest that certain industries and regional markets now have the worst behind them,
fundamental economic data still shows no clear signs that the economy will quickly
recover. For the first time since the Second World War, the global economy is expected
to record negative growth in 2009.
The main risks to a rapid economic recovery remain unchanged: the reluctance of thefinance industry to make finance available; the growing mountains of public and private
debt; and the increasing challenge of shoring up jobs and social security systems in the
major industrialized nations in the long term. For its part, industry is confronted by the
problems of overcapacity, high inventories and liquidity issues.
Experience gleaned from the biggest economic crises over the past 50 years points
with equal clarity to a generally slow and weak phase of recovery. It will take years before
the economy in general, and industrial production in particular, returns to the levels
achieved in 2007—the last boom year before the crisis.

Voith Preparing Itself for Second Year of Recession in a Row
In its planning for fiscal 2009/10, Voith anticipates a further year of recession. The effectsof the global economic crisis will continue to influence the Group Divisions to differing
degrees and at different speeds.
With the exception of incipient signs from Asia, the markets that respond swiftly tocyclical economic trends—such as paper, raw materials and transportation &automotive—as yet give no noticeable indication that a rapid recovery will take place in2010. Voith will probably not see a substantial jump in its order intake until the following
fiscal year (2010/11).
For those markets that respond more slowly—with the exception of public transport—
it will presumably take even longer before a recovery sets in. A worldwide return to more
adequate demand patterns will not materialize before 2011.
Overall planning for the Voith Group as a whole is based on this rather conservative
scenario.
Voith Hydro expects to see new orders come in more slowly in fiscal 2009/10; orders
will be below the levels of the preceding years. Large stocks of orders in hand will
nevertheless shape the pattern of sales during the coming fiscal year. Hydro power plants
remain one of the key technologies for the generation of electricity from renewablesources. Irrespective of global economic developments, therefore, the medium-term
outlook remains positive.

Management Report | 83

By diversifying its spectrum of services, Voith Industrial Services has largely broken
free of its heavy dependency on individual markets. The Group Division is now well placed
especially in the forward-looking markets for high-tech services and contract engineering
services. It also occupies a very strong position in Brazil, China and India, from which
initial signs of economic stimulus are already emanating. In light of this situation, Voith
Industrial Services expects the market environment to remain difficult and the businessvolume to decline moderately in fiscal 2009/10.
In the final quarter of fiscal 2008/09, Voith Paper saw a sharp rise in its Asian business.
Orders received in fiscal 2009/10 are therefore expected to be higher than in the period
under review. This alone does not constitute a fundamental change of direction, however,but should rather be interpreted as an interim peak. Hard-hit by the global financial crisisand regional structural changes, the market environment in the paper industry remains
critical.
Voith Turbo will continue to feel the effects of the economic crisis in the current fiscal
year, too. New orders are expected to be down in fiscal 2009/10. Sales should
nevertheless remain stable at the previous year’s level thanks to well-filled order books.
Since the market climate will remain difficult in fiscal 2009/10, consolidated net income
is expected to be roughly the same as in the period under review. In light of themacroeconomic situation and with due consideration for the Group’s balanced portfolio
of products and services, satisfactory earnings are anticipated in fiscal 2009/10 and2010/11.

Summary
Voith will continue to adapt itself quickly and flexibly to the prevailing economic conditions.
Management’s aim is to keep the company on a secure footing for the long term and toactively steer it out of this challenging first decade of the 21st century. Adaptability andthe will to apply excellent technologies to help solve the problems facing future
generations are the hallmark of Voith. Only those companies whose products and services
enable customers to compete successfully will experience lasting economic success. And
only they can stay the course as reliable partners to society as a whole.

84 | Voith Annual Report 2008/2009

Bericht zur Corporate GovernanceOn September 14 and October 5, 2009, the Board of Management and the Supervisory
Board submitted a statement of compliance pursuant to Section 161 of the German Stock
Corporation Law for fiscal 2008/09, explicitly drawing attention to a small number ofCorporate
Governance Reportdeviations. This statement of compliance has been made available to Voith’s shareholders.
One of the deviations is due to the fact that the consolidated financial statements are notmade available to the public within 90 days after the end of the fiscal year (Item 7.1.2).
The remaining deviations relate to provisions that are either not required (e.g. Items 3.10
Sentences 2-5, 5.3.3 and 6.1 through 6.8) or do not seem appropriate to an unlisted,family-owned business such as Voith (e.g. Items 3.8 Paragraph 2, 4.2.2, 4.2.4, 4.2.5, 5.4.6
and 7.1.1).

Management Report | 85

Financial Statementof Voith AG

86 | Voith Annual Report 2008/2009

Consolidated Statement of Income
for the period from October 1, 2008, through to September 30, 2009

€ in thousands

Notes

2008/09

2007/08

Sales

(1)

5 083 370

4 933 767

Change in inventories andcapitalized costs(2)(5 318)

123 802

Total output

5 078 052

5 057 569

Other operating income 1)(3)

356 974343 253

Cost of material(4)(2 129 384)

(2 217 214)

Personnel expenses(5)(1 767 960)

(1 740 160)

(151 279)(143 979)(6)(1 062 041)

(1 015 067)

Depreciation
Other operating expenses 1)

324 362

Non-recurring result(7)(97 624)

284 402(8 027)

226 738

276 375

Share of profits from associates

1 652

4 109

Interest income 2)

27 79735 288(82 721)(90 893)(17 772)

1 469

Interest expenses 2)
Other financial result(8)

Income before taxes

Income taxes

155 694(9)(78 316)

Net income

226 348(82 079)

77 378144 269

Net income attributable to shareholdersof parent company

63 109131 574

Net income attributable tominority interests

14 26912 695

1) Data for previous year adjusted; see “Summary of Significant Accounting and Valuation Policies” in the notes to the consolidated financial statements.
2) The previous year's figures were netted.

Financial Report | 87

Consolidated Balance Sheetas at September 30, 2009
Assets€ in thousands

Notes

2009-09-30

2008-09-30

A.

Non-current assets

I.

Intangible assets(10)702 198

676 165

II.

Property, plant and equipment(11)

1 059 054

977 118

III. Investments in associates(12)

17 20814 643

IV. Investments in securities(16)

187 911

13 552Other financial assets(12)

29 24835 085

VI. Other receivables and assets(15)

134 544

125 495

VII. Deferred tax assets(9)

128 533

120 051

V.

Total non-current assets

2 258 696

1 962 109

B. Current assets
I.

Inventories

II.

Trade accounts receivable

III. Marketable securities(13)

Other receivables and assets

VI. Cash and cash equivalents

924 079(14)

960 488

1 141 742(16)

106 702215 959

57 27651 457(15)229 231306 443(17)

923 127

IV. Income tax assetsV.

833 106

539 641
3 109 930

VII. Held-for-sale assets

(18)

0

3 179 321

6 700

Total current assets

3 109 930

3 186 021

Total assets

5 368 626

5 148 130

88 | Voith Annual Report 2008/2009

Equity and liabilities€ in thousands

A.

Notes

2009-09-30

2008-09-30

EquityI.

Issued capital

120 000

120 000

II.

Revenue reserves

741 059698 567

III.

Other reserves(17 406)(57 087)

IV.

Profit participation rights

83 40076 800V.

Minority interests

26 84223 407

Total equity(19)

953 895

861 687

B.

Non-current liabilities

I.

Provisions for pensions
and similar obligations(20)

404 662404 255

II.

Other provisions(21)

151 903136 871

III.

Income tax liabilities

3 393

3 495

IV.

Financial liabilities(22)

1 286 720

834 245

V.

Other liabilities(23)

118 074

145 358

VI.

Deferred tax liabilities(9)

112 188

122 630

Total non-current liabilities

2 076 940

1 646 854

C.

Current liabilities

I.

Provisions for pensions and similar obligations(20)

24 931(21)341 986

290 10977 671101 755

117 287

182 887

11 532II.

Other provisions

III.

Income tax liabilities

IV.

Financial liabilities

(22)

V.

Trade accounts payable(23)457 485539 299

VI.

Other liabilities(23)

1 318 431

1 514 007

Total current liabilities

2 337 791

2 639 589

Total equity and liabilities

5 368 626

5 148 130

Financial Report | 89

Statement of Changes in Equity

Equity attributable to shareholders
in the parent company
Revenue
reserves

Other
reserves

Total€ in thousands

IssuedcapitalProfitparticipationrightsMinority
interests

Total
equityBalance as at
2008-10-01

120 000

698 567(57 087)

761 480

76 80023 407861 687

Gains/(losses) on
available-for-salefinancial assets

40 58740 587(5)40 582

Gains/(losses)
on cash flow hedges(5 044)(5 044)(1 593)(6 637)

Currency translationdifferences

14 05314 053

1 721

15 774

Gains/(losses) on
net investments inforeign operations(17 078)(17 078)(337)(17 415)

Tax on items
recognized directlyin equity

7 163

7 163

437

7 600

Total income forthe year recognizeddirectly in equity

39 68139 681223

39 90463 10914 26977 37814 492117 282

Net income

63 109Total income
for the year

63 109

Allocation of profit
participation rights
Change in Groupstructure

39 681102 7900(4 225)(4 225)

4 225

1 697

1 697

Issue of profit
participation rights
Share of income
attributable to profit
participation rights
Dividends(23 646)

0

6 600

0

(4 225)(21 949)
6 600(4 225)(18 089)(11 700)(29 789)

Contributions fromminority shareholders

0

4 415

4 415

Minority interests’
put options

0

19 87419 87426 842953 895

Balance as at
2009-09-30(18 089)0

120 000

90 | Voith Annual Report 2008/2009

741 059(17 406)

843 653

83 400Equity attributable to shareholders
in the parent company
Revenue
reserves

Other
reserves

Total€ in thousands

IssuedcapitalProfitparticipationrightsMinority
interests

Total
equityBalance as at
2007-10-01

120 000

581 955

6 412

708 367

76 800

20 046805 213

Gains/(losses) on
available-for-salefinancial assets(45 808)(45 808)33(45 775)

Gains/(losses)
on cash flow hedges(6 112)(6 112)(3 005)(9 117)

Currency translationdifferences(10 299)(10 299)(83)(10 382)

Gains/(losses) on
net investments inforeign operations(5 007)(5 007)(392)(5 399)Tax on items
recognized directlyin equity

3 727

3 727

1 028

4 755

Total income forthe year recognizeddirectly in equity(63 499)(63 499)(2 419)(65 918)

131 574

12 695144 269

Net income

131 574

Total income
for the year

131 574

Allocation of profit
participation rights
Change in Groupstructure(63 499)

68 0750

10 27678 351

(11)

(11)

11

0

0

(2 601)(2 601)(497)(3 098)0(11)(12 350)(12 350)(9 381)(21 731)

0

2 963

2 963

23 407861 687

Share of income
attributable to profit
participation rights

0

Dividends
Minority interests'
put options
Balance as at
2008-09-30

120 000

698 567(57 087)

761 480(11)76 800Financial Report | 91

Consolidated Cash Flow Statement€ in thousands

2007/08 1)

2008/09

Income before taxes

155 694

226 348

Depreciation

174 016

144 724

Interest result

54 92455 605

Other non-cash items(3 552)(1 402)

Result from the disposal of property,
plant, equipment and intangible assets

1 225

(462)

Investment income(1 127)(1 554)

Changes in provisions and accruals

45 208

1 017

Change in net working capital

34 555125 493

Interest payments(56 492)(59 931)

Interest received

25 22230 403

Dividends received
Tax payments

1 267

2 388

(127 293)(91 130)

Cash flow from operating activities

Investments in property, plant, equipment and intangible assets

303 647(253 695)

431 499(281 278)

Proceeds from disposal of property, plant,
equipment and intangible assets

17 58513 905Investments in financial assets(5 593)(18 150)

Acquisition of minority interests and subsequent payments
on purchasing price of previous acquisitions(67 004)0

Acquisition of subsidiaries(1 508)(116 093)

956

10 106

Proceeds from the disposal of financial assets
Changes in investments in securities(35 517)

Cash flow from investing activities

Dividend payments

61 506(344 776)(330 004)(34 014)(21 742)

Contributions from minority shareholders

4 415

0

Other changes in equity

6 600

0

New bonds, bank loans and overdrafts

692 900

41 728

Repayment of bonds, bank loans and overdrafts(298 263)(14 028)

39 262(22 866)

Changes in financial receivables and financial liabilities
Cash flow from financing activities

410 900(16 908)

Total cash flow

369 771

84 587

Exchange rate movements, valuation changes
and changes in Group structure

13 715(10 054)

Cash and cash equivalents at the beginning of the period

539 641465 108

Cash and cash equivalents at the end of the period

923 127539 641

1) Data for previous year adjusted; see “Summary of Significant Accounting and Valuation Policies” in the notes to the consolidated financial statements.

For more information, refer to the “Notes to the Consolidated Cash Flow Statement.”

92 | Voith Annual Report 2008/2009

GENERAL

Notes
to the Consolidated Financial
Statements 2008/09

Voith AG is headquartered at St. Pöltener Strasse 43, Heidenheim/Brenz, Germany. The
company participates in the capital markets and is required to prepare consolidated
financial statements pursuant to Section 290 of the German Commercial Code (Handelsgesetzbuch, HGB) in conjunction with Section 315a HGB. It is entered in theCommercial Register (under the number HRB 661319) at the Registration Court in Ulm,
Germany. The consolidated financial statements of Voith AG are filed with the electronic
version of the Federal German Gazette.
On November 30, 2009, the Board of Management of Voith AG released the consolidated financial statements for presentation to the Supervisory Board.
Pursuant to EU Regulation (EC) No. 1606/2002 in conjunction with Section 315a of theGerman Commercial Code (HGB), the consolidated financial statements of Voith AG for
fiscal 2008/09 were prepared in accordance with International Financial ReportingStandards (IFRS) and the interpretations of the International Financial Reporting
Interpretations Committee (IFRIC). This Regulation compels all companies that participate
in the capital markets (i.e. whose issued debt is traded on a regulated market in an EU
member country) and are domiciled in the EU to prepare their consolidated financial
statements solely on the basis of IFRS as endorsed by the EU. The term IFRS also
includes the current valid International Accounting Standards (IAS). All binding
pronouncements made by the International Accounting Standards Board (IASB) havebeen taken into account, as have the additional stipulations required in accordance with
Section 315a HGB.
The reporting currency for the consolidated financial statements is the euro. Except
where explicitly stated otherwise, all amounts are stated in thousands of euros.
In the balance sheet, assets and liabilities are stated either as current or non-current
items in line with their maturity. Assets and liabilities that will be realized or will mature
within 12 months after the end of the period under review are classed as current.
Inventories and trade accounts receivable and payable are always classed as current
items. The consolidated statement of income was prepared in accordance with the natureof expense method.

CONSOLIDATED GROUP

The Voith Group is divided into four Group Divisions: Voith Hydro (formerly Voith Siemens
Hydro Power Generation), Voith Industrial Services, Voith Paper and Voith Turbo. In
accordance with contractual agreements, the right to use the name “Voith Siemens Hydro
Power Generation” expired in the period under review. Where it owns a minority stake,
Siemens only ever allows its name to be used for a limited transitional period. In future, thisGroup Division will therefore operate under the name Voith Hydro. The shareholding ratio—

Financial Report | 93

Voith continues to hold a 65% stake and Siemens a 35% stake—remains unaffected by thechange of name. Details of the business activities pursued by the Group Divisions areprovided in the explanatory notes to the segment report.
In addition to those companies acting as holding companies, the consolidated financial
statements also include all the Group’s major manufacturing, service and marketingcompanies both in Germany and abroad as at September 30 in each fiscal year. Consistentaccounting and valuation policies are used to prepare the separate financial statements for
subsidiary companies as applied for the parent company at each balance sheet date.
Subsidiaries are consolidated at the time when the Voith Group acquires control overthem. Their inclusion in the consolidated financial statements ends when the parent
company no longer controls these companies. In three cases, Voith AG exercises control as
defined in IAS 27 owing to a majority of voting rights in the relevant decision-making bodies.
The following companies are included in the consolidated financial statements:
2009-09-30

2008-09-30

Germany

82

78

Abroad170

168

Total fully consolidated companies

252

246

Germany31

Abroad128

Total associated companies
accounted for using
the equity method

15

9Voith AG and its fully
consolidated subsidiaries:

Associated companies accounted for using
the equity method:

The main companies consolidated for the first time in the fiscal year under review are Voith
Hydro Ocean Current Technologies GmbH & Co. KG, Heidenheim/Germany, Voith Hydro
Limited Sirketi, Sögütözü Ankara/Turkey, Voith Industrial Services Ermo GmbH,
Merseburg/Germany, Voith Industrial Services Indumont GmbH & Co. KG, Wesseling/Germany, Voith Industrial Services India Private Limited, Hyderabad/India (A.P.),
PremiAir Technology, Inc., Saint-Laurent-Québec/Canada, and Voith Turbo S.A. de C.V.,
Mexico (D.F.).
An exhaustive German-language list of the companies and other investments includedin the consolidated financial statements has been filed as a section of the consolidated
financial statements with the electronic version of the Federal German Gazette.
Companies in which Voith AG has the opportunity directly or indirectly to exercise asignificant influence on financial and operating policy decisions (associated companies)
are measured using the equity method. In the period under review, the following
companies were measured using the equity method and included in the consolidated

94 | Voith Annual Report 2008/2009

financial statements for the first time: Ox-traction N.V. and Ox-traction (Locomotives) N.V.,
Roosendaal/Netherlands, in each of which Voith holds a 46% interest; and SVK-Beteiligungen GmbH & Co. KG, Heidenheim/Germany, in which Voith holds a 39.41% interest.
Pursuant to Section 264b HGB, the following limited partnerships are not required toprepare annual financial statements subject to the regulations valid for incorporated firms:
VIEH

Voith Industrial Services Process GmbH & Co. KG, Stuttgart

VIGG

Voith Industrial Services Grundstücks GmbH & Co. KG, Stuttgart

VIME

Voith Industrial Services Mechanical Engineering GmbH & Co. KG, Stuttgart

VIPH

Voith Industrial Services Paper GmbH & Co. KG, Heidenheim

VIPS

DIW Instandhaltung GmbH & Co. KG, Heidenheim

VISD

Spüldienste Niederbayern GmbH & Co. KG, Dingolfing

VISI

Voith Industrial Services Ermo GmbH & Co. KG, Stuttgart

VISK

Voith Industrial Services Energy GmbH & Co. KG, Stuttgart

VISN

Voith Industrial Services Indumont GmbH & Co. KG, WesselingVIST

DIW Instandhaltung Ltd. & Co. KG, Stuttgart

VPAH

Voith Paper Automation GmbH & Co. KG, Heidenheim

VPDN

Voith Duria GmbH & Co. KG, Heidenheim

VPEU

Voith Paper GmbH & Co. KG, Euskirchen

VPES

Voith Paper Environmental Solutions GmbH & Co. KG, Ravensburg

VPFH

Voith Paper Fabrics GmbH & Co. KG, Heidenheim

VPH

Voith Paper GmbH & Co. KG, Heidenheim

VPLB

Voith Paper Air Systems GmbH & Co. KG, Bayreuth

VPMG

Voith Paper Krieger GmbH & Co. KG, Mönchengladbach

VPR

Voith Paper Fiber & Environmental Solutions GmbH & Co. KG, Ravensburg

VPSH

Voith Paper Rolls GmbH & Co. KG, Heidenheim

VPT

Voith Paper Holding GmbH & Co. KG, Heidenheim

VPWE

Voith Paper Rolls GmbH & Co. KG, Weissenborn

VHH

Voith Hydro Kraftwerkstechnik GmbH & Co. KG, Heidenheim

VHHC

Voith Hydro Ocean Current Technologies GmbH & Co. KG, Heidenheim

VHZ

Voith Hydro Holding GmbH & Co. KG, Heidenheim

VTA

Voith Turbo GmbH & Co. KG, Heidenheim

VTBH

Voith Turbo BHS Getriebe Holding GmbH & Co. KG, Sonthofen

VTGO

Voith Turbo Aufladungssysteme GmbH & Co. KG, Gommern

VTHL

Voith Turbo H+L Hydraulic GmbH & Co. KG, Rutesheim

VTKH

Voith Turbo Hochelastische Kupplungen GmbH & Co. KG, Essen

VTLH

Voith Turbo Lokomotivtechnik GmbH & Co. KG, Heidenheim

VTSH

Voith Turbo Schneider Propulsion GmbH & Co. KG, Heidenheim

VTSK

Voith Turbo Scharfenberg GmbH & Co. KG, Salzgitter

VTWH

Voith Turbo Wind GmbH & Co. KG, Heidenheim

VTRH

AIR Fertigung-Technologie GmbH & Co. KG, Hohen Luckow

VTZS

Voith Turbo Verdichtersysteme GmbH & Co. KG, Zschopau

Financial Report | 95

VZB

J.M. Voith GmbH & Co. Beteiligungen KG, Heidenheim

VOGG

Voith Grundstücksverwaltungs GbR, Heidenheim

VOM

Voith Materials Holding GmbH & Co. KG, Heidenheim

VOMH

Voith Materials GmbH & Co. KG, Heidenheim

Since they are included in the consolidated financial statements of Voith AG, the following
incorporated firms are not required to comply with regular disclosure obligations insofar
as the conditions defined in Section 264 (3) HGB (reporting duties) are met.
VIH

Voith Dienstleistungen GmbH, Heidenheim

VOFS

Voith Financial Services GmbH, Heidenheim

VOFZ

Voith Finance GmbH, Heidenheim

VOHA

Voith Assekuranz Vermittlung GmbH, Heidenheim

VOHB

Voith Dienstleistungsbeteiligungen GmbH, Heidenheim

VOIS

Voith IT Solutions GmbH, Heidenheim

Pursuant to Section 264b Paragraph 3 HGB and Section 264 (3) Paragraph 4 HGB, a copyof the consolidated financial statements of Voith AG is filed with the electronic version of
the Federal German Gazette.
In addition to the companies listed above, the following significant companies are also
included in the consolidated financial statements:

96 | Voith Annual Report 2008/2009

VFWS

Voith Paper Fabrics US Sales, Inc., Wilson (NC)/USA

VPA

Voith Paper, Inc., Appleton (WI)/USA

VPIT

Voith IHI Paper Technology Co., Ltd., Tokyo/Japan

VPKR

Voith Paper GmbH, Krefeld/Germany

VPP

Voith Paper Máquinas e Equipamentos Ltda., São Paulo (SP)/Brazil

VPS

Voith Paper GmbH, St. Pölten/Austria

VPSO

Voith Paper S.r.L., Schio (Vicenza)/Italy

VHFKVoith Fuji Hydro K. K., Kawasaki-shi/Japan

VHP

Voith Hydro Ltda., São Paulo (SP)/Brazil

VHPO

Voith Hydro GmbH & Co KG, St. Pölten/Austria

VHS

Voith Hydro Shanghai Ltd., Shanghai/China

VHY

Voith Hydro, Inc., York (PA)/USA

VTI

Voith Turbo, Inc., York (PA)/USA

VICU

Premier Manufacturing Support Services, Inc., Cincinnati (OH)/USA

VIKI

Hörmann Industrietechnik GmbH, Kirchseeon/Germany

VIW

DIW Instandhaltung GmbH, Vienna/Austria

VIWA

Premier Manufacturing Support Services (UK) Ltd., Warwick/UK

BUSINESS COMBINATIONS IN FISCAL 2007/08

The main business combinations in fiscal 2007/08 involved the acquisition of a 100%
stake in Ermo Holding GmbH, Mainhausen/Germany (effective February 29, 2008), a
100% stake in SIS Skandinavisk Industriservice AS, Ringsted/Denmark (at the endof November 2007), a 90% stake in CeBeNetwork Holding GmbH, Bremen/Germany(effective June 1, 2008), and a 100% stake in Ing. Erich Kössler Gesellschaft m.b.H.,
St. Pölten/ Austria (at the end of December 2007). Taken together, business combinations
in fiscal 2007/08 contributed a total of € 116.5 million to sales and net income of € 1.1 million
to the Voith Group’s consolidated statement of income. Also in fiscal 2007/08, retroactive
payments totaling € 7.8 million were made for acquisitions effected in the previous year.

BUSINESS COMBINATION IN FISCAL 2008/09

Acquisition of PremiAir Technology, Inc., Montréal/Canada
Effective October 1, 2008, Voith Canada, Inc., Hamilton/Canada, acquired all shares in
PremiAir Technology, Inc. This company primarily serves the US market and Europe,
where its main focus is Germany. PremiAir Technology, Inc. operates in the market for air
and drying technology for cellulose, paper and tissue production and will be integrated inVoith Paper Air Systems.
All acquired assets were recognized at fair value. The difference between the purchaseprice and acquired equity that could not be assigned to any particular asset was statedas goodwill.
Some of the acquired intangible assets (such as the employee base) could not berecognized as they did not meet the recognition criteria. Goodwill derives from positiveeffects anticipated for Air Systems when Voith Paper’s existing activities in this segment
are combined with those of the newly acquired company.
In fiscal 2008/09, PremiAir Technology, Inc. contributed sales totaling € 2.8 million anda net loss of € 0.5 million to the Voith Group’s consolidated statement of income.

Financial Report | 97

Siehe Excel Tabelle Unternehmenserwerbe – ganzseitig mit 2-Zeiler darunter
The fair value of the acquired assets and liabilities is shown in the table below:
Balance sheet item
€ in thousands
Intangible assets
Property, plant and equipment
Current assets

Fair values attime of acquisition

Carrying amounts
immediately before
combination

1 028

18

34

34

1 480

1 480

Provisions

(60)

(60)

Liabilities(1 249)(1 016)

Carrying amount

1 233

456

Goodwill
Purchase price of acquired shares
Cash and cash equivalents
Debt-financed amount
Cash in-/outflow
Thereof:
Incidental costs

364
1 597
(89)
0
1 508
38

Incidental costs related to acquisition essentially include the cost of contractual negotiation and design and the cost of consulting services used in the course of acquisition.
In relation to business combinations in previous years, expenses of € 5 757 thousand
were recognized in the fiscal year under review for write-downs on assets revealed in thecontext of purchase price allocation.

98 | Voith Annual Report 2008/2009

Principles of Consolidation
For the purposes of capital consolidation and in accordance with the purchase method
prescribed by IFRS 3, the cost of the combination is netted against the corresponding
shareholders’ equity acquired, which is stated at its value as at the acquisition date. Any
excess of cost over the carrying amount is capitalized as goodwill. Excesses of thecarrying amount over cost are recognized in profit and loss.
Business combinations involving companies that are under the common control of one
or more parties are presented using the pooling of interest method. Under this method,
gains or losses on disposal are, for reasons of immateriality, recognized in equity (inreserves). In the case of acquisitions, excesses of cost over the carrying amount andexcesses of the carrying amount over cost are netted in full against reserves.
The purchase method is applied in cases where the Voith Group subsequently
purchases additional shares in companies in which it already exercises control. Hidden
reserves and liabilities are not disclosed in such cases.
The same accounting and valuation policies are used to determine Voith’s stake in theshareholders’ equity of all companies accounted for using the equity method.
Intercompany transactions and results are eliminated. Unrealized gains in inventories
and fixed assets relating to intercompany transactions are eliminated in the consolidated
statement of income. Intercompany sales and other intercompany earnings are netted
against the corresponding expenses. Deferred tax is calculated for consolidationtransactions that are recognized in profit and loss.

Foreign Currency Translation
The consolidated financial statements are prepared in euros, Voith AG’s functional
currency. Financial statements prepared by subsidiaries that use a different functional
currency are translated as follows:
Shareholders’ equity for foreign subsidiaries is translated at historical rates. All otheritems on the balance sheet are normally translated at the rates applicable as at thebalance sheet date. Goodwill arising from business combinations before the transition to
IFRS is an exception to this rule and is still translated at historical rates.
In the consolidated statement of income, income and expenses are translated ataverage exchange rates. Retained earnings and losses are translated using the relevant
historical exchange rate.
Differences arising from currency translation are netted against other reserves.
Foreign currency transactions in local financial statements are translated at theexchange rate on the effective date of the transactions concerned. At fiscal year-end, theresultant monetary items are measured in light of the exchange rate at the balance sheet
date. Any gains or losses on currency translation are recognized in profit and loss as
unrealized gains or losses.

Financial Report | 99

Translation adjustments arising from loans denominated in foreign currencies (where these
are used to hedge net investments in foreign business operations) are recognized in equity
until the underlying net investment is disposed of. Only after disposal are they recognizedin the consolidated statement of income. These translation adjustments give rise todeferred tax items that are also recognized in equity.
In the period under review, translation of the currencies that are of significance to theVoith Group was based on the following exchange rates:
Exchange rates between the euro and the main foreign currencies in the Voith Group
Exchange rate at the balance sheet date

Average rate

2009-09-30

2008-09-30

2008/09

2007/08

US Dollar

1.46191.43401.36181.5044

Brazilian Real2.60452.81912.86242.5938Pound Sterling

0.91400.79610.87380.7623

Swedish Krona

10.21949.793010.5257

9.4052

Norwegian Krona

8.48948.30808.8282

7.9738Canadian Dollar

1.56891.50101.58711.5102Australian Dollar

1.6563

1.7814

1.8426

1.6610Chinese Renminbi

9.98029.83509.3262

10.6664130.9306

150.5600

130.2030

161.9200

Japanese Yen

Summary of Significant Accounting and Valuation Policies
The consolidated financial statements are prepared using the historical cost method. The
only exceptions to this rule are derivative instruments, financial instruments held for saleand assets that must be recognized at fair value in profit and loss. All these exceptions
are recognized at fair value. Acquisitions and disposals of financial assets are always
reported at the settlement date. Available-for-sale marketable securities are recognizedon the date of regular market buying and selling transactions.
In accordance with IAS 27, consistent accounting and valuation policies are used toprepare the separate financial statements for the companies subsumed under the
consolidated financial statements. The main accounting and valuation policies are listed
and explained below.

100 | Voith Annual Report 2008/2009

Income and Expenses
Sales revenue (less various cash and other discounts granted to customers) is recognizedwhen products or merchandise have been delivered and/or services rendered and when
the risk of ownership has been transferred to the customer. In the case of long-term
construction contracts, sales are recognized using the percentage-of-completion method.
A detailed explanation of this method is provided in the notes on “Long-term construction
contracts.”
Interest expenses and interest income are recognized as they accrue. (The effective
interest rate method, i.e. the imputed interest rate, is used to discount estimated future
cash inflows over the expected maturity of a financial instrument to the net carrying
amount of the underlying financial asset.) Dividend income is recognized when receipt of
payment becomes a legal entitlement. Operating expenses are recognized as expenditure
at the time when a service is used or when other sales-related expenses are incurred.
Taxes on income are calculated in accordance with taxation law in the countries in which
the Group operates.
For all categories of financial instruments recognized in accordance with IAS 39, net
gains or losses are resulting from valuation or disposal of financial instruments. At Voith,such income and expense items mainly consist of foreign exchange gains and losses,
allowances and income/expenses from the sale of financial instruments. Neither current
interest income and expenses nor dividend income are included.

Intangible Assets
Acquired intangible assets are capitalized at cost and depreciated in a straight line overtheir anticipated useful lives. Most of these assets are software programs that are
depreciated over a three-year period.
Internally generated intangible assets are capitalized as development costs based on
their production costs, provided that manufacture of these assets meets the recognition
criteria stated in IAS 38 and will, in particular, probably result in future economic benefits
for the Group. Production costs include all costs that are directly attributable to thedevelopment process. These assets are depreciated in a straight line from the start ofproduction for a defined period, usually between three and ten years. If the requirements
for capitalization are not met, expenses are recognized in profit and loss in the fiscal year
in which they were incurred.

Financial Report | 101

Unscheduled write-downs (impairments) are effected in accordance with IAS 36 if therecoverable amount (the present value of expected future cash flows from the use of theassets concerned) or the higher net realizable value less selling costs falls below theircarrying amount. Should the reasons for impairments effected in previous periods nolonger apply, impairments are reversed.
Goodwill is subjected to annual impairment tests. To calculate its value, goodwill is
assigned to four cash-generating units. In line with the management’s internal reporting
practices, these four cash-generating units are identified on the basis of the Group’s
operating activities. Voith AG has therefore defined the Group Divisions Voith Hydro, Voith
Industrial Services, Voith Paper and Voith Turbo as its four cash-generating units.
At the Voith Group, goodwill is tested for impairment on the basis of its value in use,which itself is based on current management planning data. Planning assumptions are
adapted in line with new knowledge. Key assumptions underpinning calculations of value
in use include assumptions about the trend in orders received and sales, growth rates,
extrapolated cash flow forecasts beyond the planning horizon, and discount rates. Dueaccount is taken of reasonable assumptions regarding macroeconomic trends andhistorical developments.
The Board of Management believes that the recession will continue through fiscal
2009/10. Only then is an initial slight improvement expected. The assumptions outlined
below are posited on this view.
Voith Hydro
Voith Hydro expects the order intake to slow to about the level of previous years in thefirst year of its planning period. In spite of global economic developments, the mediumterm outlook for the hydro power plant business is rated as good. In the long term, thisGroup Division therefore expects to see a slight increase in new orders and sales.
Voith Industrial Services
In fiscal 2009/10, Voith Industrial Services expects the adverse market climate to lead toa moderate decline in its business volume. The recession is expected to continue on
through fiscal 2010/11; a recovery should then ensue. Orders received and sales areplanned to be slightly above their current level in the longer term.
Voith Paper
As its market context remains critical, Voith Paper anticipates a modest year-on-year gainin new orders in fiscal 2009/10. The market is not expected to recover until the second
year of this Group Division’s planning horizon. In the longer term, the plan is for new orders
and sales to increase again to a similar level as in the past.

102 | Voith Annual Report 2008/2009

Voith Turbo
A declining order intake is projected at Voith Turbo in fiscal 2009/10, followed by a mild
recovery. In the longer term, the Group Division thus anticipates slightly more orders andsales compared to the current figures.
A small increase in margins due to efficiency gains is planned for all Group Divisions.
Cash flow forecasts are based on the detailed financial budget for the coming year, on
the financial planning figures for the coming two years and on well-founded top-downplanning for a two-to-six-year period. Cash flows for periods after the sixth fiscal year are
extrapolated at a constant 1% growth rate. These growth rates do not exceed the average
long-term growth rates of the business areas in which the corresponding cash-generating
units operate.
The discount rates are derived from a calculation of the weighted average cost ofcapital, which is itself based on the debt/equity structure at Voith and the financing costsof comparable competitors for each of the cash-generating units. The discount rates
applied reflect the equity risk specific to each cash-generating unit. After-tax interest rates
of 6.9% (previous year: 7.9%) for Voith Hydro, 6.6% (previous year: 7.4%) for Voith
Industrial Services, 7.2% (previous year: 8.0%) for Voith Paper and 6.8% (previous year:
7.6%) for Voith Turbo were used to calculate the present value of future net cash inflows.
Extrapolation to the pre-tax rate that must be stated pursuant to IAS 36 results in interest
rates of 9.3% (previous year: 11.2%) for Voith Hydro, 8.9% (previous year: 10.6%) for Voith
Industrial Services, 9.4% (previous year: 11.4%) for Voith Paper and 9.3% (previous year:
11.8%) for Voith Turbo.

Property, Plant and Equipment
Property, plant and equipment is stated at cost less scheduled depreciation and, where
necessary, impairment losses. Production costs for internally generated property, plantand equipment include all directly attributable production costs and an appropriate shareof production overheads. Depreciation is effected in a straight line over the following useful
lives:
Useful life
Buildings

40 to 50 years

Plant and machinery

4 to 15 years

Other equipment

4 to 12 years

Financial Report | 103

The recognized carrying amount of property, plant and equipment is subjected to an
impairment test if unusual events or market developments indicate that they may be
impaired. To this end, the carrying amount of an asset or cash-generating unit is comparedwith its recoverable amount, which is defined as the higher of fair value less costs to selland value in use. Impairment losses are reversed if the fair value of a previously impaired
asset subsequently increases again.
Repair and maintenance costs are recognized as expenses at the time when they are
incurred. Significant renewals and improvements are capitalized. Interest on borrowed
funds is not capitalized.

Leased Assets
Leasing transactions that transfer substantially all risks and opportunities incidental to useof the leased property, plant or equipment to the Voith company (the lessee) are classified
as finance leases. In such cases, the lessee capitalizes the leased asset at the start of thelease period and writes it down over the asset’s useful life. A corresponding liability isrecognized and then settled by the lease payments. The interest component is recognizedin the interest result. All other leases in which Voith Group companies act as the lessee
are stated as operating leases. The lease payments for operating leases are recognized
as expenses in a straight line over the term of the lease.

Financial Assets and Marketable Securities
Shares carried under financial assets as other investments are normally recognized at fairvalue. Where no active market exists for individual companies and their fair value cannot
be determined at reasonable cost, shares are stated at cost. The carrying amount of such
assets is written down if substantial objective evidence indicates that they are impaired.
Where the equity method is applied, associated companies are stated at the amountof equity held by the Voith Group plus any goodwill. Changes in associated companies’
equity that are not recognized in profit and loss are likewise recognized directly in equity
in the consolidated financial statements.
In accordance with IAS 39, loans are classified as non-current loans under otherfinancial assets and are stated at amortized cost, adjusted (where necessary) for
impairments recognized in their carrying amount.

104 | Voith Annual Report 2008/2009

In accordance with IAS 39, distinctions between “held-for-trading,” “available-for-sale,”“held-to-maturity” and “financial assets at fair value through profit and loss” must be madefor marketable securities that are classified as non-current or current assets. Marketablesecurities held by the Voith Group are normally available for sale. To a small extent,
however, the Group also makes use of financial instruments that are held for trading andmarketable securities that, at initial measurement, are recognized at fair value throughprofit and loss. The latter securities are structured, non-divisible certificates andconvertible bonds that are authorized for stock market trading.
Where market valuations can be obtained, securities are stated at their market value.
Where market valuations cannot be obtained, they are measured using alternative
methods. Available-for-sale marketable securities are recognized separately in equity,
taking due consideration of deferred taxes, until such time as they are realized. These
securities are assets that are not held for trading.
Where no market value is available and fair value cannot be determined at reasonable
cost, marketable securities are recognized at cost. The carrying amount of available-forsale marketable securities and financial assets is written down and recognized in profit
and loss if it becomes probable that their market value will permanently remain lower thantheir cost.
The carrying amounts of financial assets and available-for-sale securities are regularly
tested for objective evidence that they are impaired. Such evidence can take the form of
substantial financial difficulties on the part of the debtor or changes in the technological,
economic and legal environment. Objective evidence that equity instruments may be
impaired is given if their fair value drops permanently or significantly. If fair value falls morethan 30% below cost, this is classed as a significant decline. If this happens, the amounts
hitherto recognized in equity are recognized in profit and loss.

Fair Value
The fair value of financial investments for which an organized market exists is determinedby the listed market price at the balance sheet date. Where no active market exists,
measurement methods are used to determine the fair value. The methods used by Voith
for this purpose aim to reflect objective criteria as accurately as possible and to simulate
an active market. This is done, for example, by analyzing discounted cash flows, referring
to arm’s-length transactions between knowledgeable, willing and independent partners,
and drawing on comparisons with the current fair value of other essentially identicalfinancial instruments.

Financial Report | 105

Inventories
Raw materials and supplies, merchandise, work in progress and finished goods are allstated under inventories at the lower of cost and net realizable value. Production costs
include both direct costs and an appropriate share of material and production overheads
and production-related depreciation that can be attributed directly to the production
process. The weighted average cost, or cost based on the first-in, first-out (FIFO) method
is capitalized in the balance sheet. Suitable allowances are made for inventory risks arisingfrom the period in stock, lower realizable values, etc. These allowances are reversed if thereasons for the initial impairment of inventories no longer exist.

Long-Term Construction Contracts
Long-term construction contracts are recognized based on the percentage-of-completion(PoC) method. The cost-to-cost method is used to calculate the ratio of costs alreadyincurred to forecast total costs in order to determine the percentage of completion.
Realized earnings are then stated as sales and, after deducting customer advances, as
trade accounts receivable. If the outcome of a construction contract cannot be forecastwith any degree of certainty, it is not possible to calculate the percentage of completion
based on project revenues and costs. In such cases, sales revenues in the amount of costs
incurred for the construction contract to date are recognized immediately as income, while
the costs incurred by the construction contract in the reporting period are immediately
recognized in full as expenses. Appropriate provisions are formed to cover anticipatedlosses on such contracts in light of perceivable risks.

Accounts Receivable and Other Assets
Accounts receivable and other assets (with the exception of financial derivatives) arestated at face value or at cost and are regularly tested for individual impairment. Where
objective indications of possible default exist (if the debtor is experiencing substantial
financial difficulties, if it is highly probable that insolvency proceedings will be opened
against the debtor, if the debtor defaults on or delays interest or loan repayments, ifchanges in the technological, economic or legal environment put the contractual partner
at a significant disadvantage, if the fair value of a financial instrument falls significantly or
permanently below its cost, or if legal proceedings are opened, for example), then106 | Voith Annual Report 2008/2009

individual allowances are effected in an impairment account to allow for these factors.
Where write-downs are calculated from historical default rates on the basis of the portfolio,
any decline in the volume of receivables leads to a corresponding decline in suchallowances, and vice versa. Accounts receivable that are classed as irrecoverable are
derecognized. Accounts receivable that bear little or no interest and that have maturities
of more than one year are stated at their discounted present value.

Financial Derivatives and Hedging Relationships
Voith uses a variety of financial derivatives—usually forward exchange contracts, currency
options and interest rate swaps—to hedge underlying transactions. Essentially, the Groupapplies two policies—either the fair value hedge accounting of firm commitments or cash
flow hedge accounting—to hedge operating business transactions.
At the inception of a hedge relationship, the Group formally designates and documents
both the hedge relationship to which the Group wishes to apply hedge accounting andthe risk management objectives and strategy for undertaking the hedge. The
documentation includes identification of the hedging instrument, the hedged item ortransaction, the nature of the risk being hedged, and how the Group will assess thehedging instrument’s effectiveness in offsetting the exposure to changes in the hedged
item’s fair value or cash flows attributable to the hedged risk. Such hedges are expected
to be highly effective in offsetting the risk of changes in fair value or cash flows and areassessed on an ongoing basis to determine that they have indeed been highly effective
throughout the financial reporting periods for which they were designated.
Hedges that meet the strict criteria for hedge accounting are accounted for as follows.
Fair value hedges
Fair value hedges are hedges of the Group’s exposure to changes in the fair value of arecognized asset or liability or an unrecognized firm commitment that is attributable to aparticular risk and could affect profit or loss. For fair value hedges, the carrying amountof the hedged item is adjusted for gains and losses attributable to the risk being hedged,
the derivative is remeasured at fair value, and gains and losses from both are recognizedin profit or loss.
For fair value hedges relating to items carried at amortized cost, the adjustment tocarrying amount is amortized through profit or loss over the remaining term to maturity.
When an unrecognized firm commitment is designated as a hedged item, thesubsequent cumulative change in the fair value of the firm commitment attributable to the

Financial Report | 107

hedged risk is recognized as an asset or liability with a corresponding gain or loss
recognized in profit or loss. Changes in the fair value of the hedging instrument are also
recognized in profit or loss.
The Group discontinues fair value hedge accounting if the hedging instrument expires,
is sold, terminated or exercised, or if the hedge no longer meets the criteria for hedge
accounting. Any adjustment to the carrying amount of a hedged financial instrument ismade using the effective interest method to amortize it in the statement of income.
Amortization may begin as soon as an adjustment exists and shall begin no later thanwhen the hedged item ceases to be adjusted for changes in its fair value attributable to
the risk being hedged.
Cash flow hedges
Cash flow hedges are hedges of the Group’s exposure to variability in cash flows that is
attributable to a particular risk associated with a recognized asset or liability or a highly
probable forecast transaction and could affect profit or loss. The effective portion of thegain or loss on the hedging instrument is recognized directly in equity, while the ineffective
portion is recognized in profit or loss.
Amounts initially recognized directly in equity are transferred to the statement ofincome when the hedged transaction affects profit or loss, such as when hedged financial
income or financial expense is recognized or when a forecast sale or purchase occurs.
Where the hedged item is a non-financial asset or liability, the amounts recognized inequity are transferred to the initial carrying amount of the non-financial asset or liability.
If the forecast transaction is no longer expected to occur, amounts previously
recognized directly in equity are transferred to profit or loss. If the hedging instrument
expires, is sold, terminated or exercised without replacement or rollover, or if thedesignation as a hedge is revoked, amounts previously recognized in equity remain in
equity until the forecast transaction occurs. If the related transaction is not expected tooccur, the amount is recognized in profit or loss.
Where no hedging relationship with an underlying transaction exists (i.e. where hedge
accounting does not apply), financial derivatives are classified as held-for-trading
instruments. Changes in the fair value of these instruments are recognized in profit
and loss.
Financial derivatives with positive values are stated under other assets, those withnegative values are stated under other liabilities.
A treasury tool is used to manage all external hedges.

108 | Voith Annual Report 2008/2009

The same treasury tool is also used to calculate the fair value of forward exchange
contracts. The original forward rate is compared with the forward rate calculated at thebalance sheet date. The difference is discounted to the balance sheet date. The forward
rate is calculated based on interest rates for the two currencies determined by linear
approximation on the basis of current LIBOR rates. The fair value of options, interest rate
swaps and interest rate caps is based on information supplied by banks. This information
is calculated on the basis of certain assumptions and using recognized valuation models(Black-Scholes and Heath-Jarrow-Morton).

Embedded Derivatives
At the time when the Group becomes party to a contract, the Group determines whether
any embedded derivatives have to be accounted for separately from the host contract.
Revaluation takes place only in the event of significant amendments to the contractual
terms where these amendments lead to significant changes in the cash flows that would
otherwise have resulted from the contract. Where embedded derivatives exist, they arerecognized at fair value as financial assets held for trading. Embedded financial derivatives
with positive values are stated under other assets, those with negative values are statedunder other liabilities.

Cash and Cash Equivalents
Cash and cash equivalents include cash and checks in hand, balances in bank accounts
and other cash equivalents. Under this item, balances in bank accounts include both daily
deposits and time deposits with fixed maturities of up to three months.

Non-Current Assets Held for Sale
Non-current assets are classified as held for sale if their carrying amount is to be
recovered principally through a sale transaction rather than through continuing use. Noncurrent assets held for sale are measured at the lower of their carrying amount and theirfair value less costs to sell.

Financial Report | 109

Deferred and Current Taxes
In accordance with IAS 12, deferred tax assets and liabilities are formed for timing
differences resulting from valuation differences arising between tax reporting and reportingfor IFRS purposes. Deferred tax items are also formed for tax losses carried forward
insofar as it is reasonable to expect that they will be realized in the near future. Deferredtaxes that relate to items recognized directly in equity are themselves recognized in equity.
Deferred taxes are calculated based on the tax rates that, in light of the current legal
position, will be or are expected to be valid in the countries concerned at the time ofrealization. Deferred tax assets that are not likely to be realized within a foreseeable period(normally two years) or that are not covered by deferred tax liabilities are either impaired
or not recognized at all. Deferred tax assets and deferred tax liabilities may be netted if
the Group has an enforceable legal claim to offset actual tax refund entitlements against
actual tax liabilities, or if they concern the same tax-paying entity.
Current taxes are calculated and reported in accordance with the tax laws andregulations valid for each company.

Profit Participation Rights
Pursuant to IAS 32, the conditions defined for the issue of profit participation rights infiscal 2006/07 and fiscal 2008/09 require these rights to be reported as a separate
component of the Group’s equity. Interest is not reported as interest expenses, but istreated in a similar manner to a dividend obligation.

Accrued Pension Liabilities and Similar Obligations
Actuarial measurement of pension provisions is based on the projected unit credit method
prescribed by IAS 19. This method takes into account known pensions and acquired
vested rights at the balance sheet date, as well as factors such as expected future
increases in salaries and pensions. Defined benefit obligations are measured based on
the proportion of future benefits accrued at the balance sheet date. Measurement makes
due provision for assumptions about the future development of certain parameters that
could affect the actual future benefit amount. The 10% corridor rule prescribed by IAS
19.92 is applied when recognizing actuarial gains and losses in the balance sheet and in
profit and loss. In measuring its defined benefit liability pursuant to IAS 19.54, a company
must recognize a portion of its actuarial gains and losses as income or expenses if the

110 | Voith Annual Report 2008/2009

net cumulative unrecognized actuarial gains and losses at the end of the previous
reporting period exceeded the greater of:a) 10% of the present value of the defined benefit obligation at that date (before deducting
plan assets); andb) 10% of the fair value of any plan assets at that date. The portion of actuarial gains andlosses to be recognized is the excess determined pursuant to IAS 19.92 divided by the
expected average remaining working lives of the employees participating in a given plan.

Other Provisions
In accordance with IAS 37, provisions are formed for all perceivable risks and obligationsof uncertain timing in the amount that is likely to be realized. These provisions are notnetted against recourse claims. Provisions are formed where the Group has present
obligations in respect of third parties resulting from past events that will probably lead toa future outflow of resources whose amount can be estimated reliably. Provisions forwarranty claims are based on historical claim trends and estimated future trends. Specificprovisions are set up for known claims. Provisions for outstanding expenses, anticipatedlosses on orders and other order-related obligations are measured based on services still
to be rendered, usually in the amount of the production costs expected to be incurred.
Provisions that will not lead to an outflow of resources in the subsequent period arestated at their discounted present value at fiscal year-end. The discount rate is derived
from market interest rates. The present value also includes anticipated cost increases. If
an amount set aside as a provision is expected to be refunded (through an insurance
claim, for example), the refunded amount is stated separately as an asset if it is almost
certain to be realized. Income from refunds is not netted against expenses.

Changes in the Reporting of
Non-Order-Related Provisions
Up to and including fiscal 2007/08, income from the use of provisions was recognized incases where use was made of certain non-order-specific provisions. This income wasstated under other operating income as “Income from the use and reversal of provisions.”
Expenses actually incurred were then recognized under other operating expenses tocancel out the income. Starting in fiscal 2008/09, any such use is recognized directlyin the provisions concerned, since such usages can be assigned unambiguously tothe corresponding costs. In the period under review, this change reduced both other

Financial Report | 111

operating income and other operating expenses by € 13 292 thousand (previous year:€ 18 445 thousand).
Where use is made of order-specific provisions, income from this use is still recognized, as the effort involved in establishing an accurate assignment to individual cost types
would be inordinate. In future, this income will be recognized as a separate item underother operating income and will cancel out the cost types concerned (mainly material
costs, personnel expenses and/or other operating expenses.)

Liabilities
Current liabilities are stated at their repayment amount. Financial liabilities are measured
at their amortized cost. Amortized cost consists of the acquisition cost less repayments,
issue charges and the amortization of any premium or discount. Where liabilities serve as
underlying transactions in the context of hedging relationships, they are stated at their fairvalue. Gains and losses are recognized in profit and loss.
Liabilities arising from leasing contracts that are classified as finance leases inaccordance with the criteria laid out in IAS 17 are recognized at the present value of theminimum lease payments at the start of the lease. Thereafter, they are stated underfinancial liabilities at their amortized cost. Lease payments are split into an interest
component and a repayment component. The interest component of each payment isrecognized as an expense in profit and loss.

Government Grants
Government grants are recognized if there is reasonable assurance that they will bereceived and if the Group complies with the conditions attached to the grants. Cost-related
grants are recognized as income over the periods necessary to match them with the costs
for which they are intended to compensate. Up to and including fiscal 2007/08, cost-related
grants were recognized as other operating income. Starting in fiscal 2008/09, these grants
will be netted against the costs for which they are granted.
As a result, other operating income and other operating expenses were each reducedby € 11 037 thousand in the period under review. Due to materiality considerations, thecorresponding adjustment of € 8 500 thousand to the previous year’s data has not beenmade. The Voith Group believes that this change in presentation gives a clearer picture of
the earnings position, as only those costs that are borne by Voith are now shown.

112 | Voith Annual Report 2008/2009

Government grants relating to assets are recognized on the balance sheet as deferredincome, and are recognized as income in equal annual installments over the estimateduseful lives of the related assets.
If the Group receives non-monetary government grants, both the assets and the nonmonetary grants are recorded at face value and then recognized as income in equal annual
installments over the estimated useful lives of the assets concerned.

Classification of Minority Interest Holders’ Capitalin Limited Partnerships and Due to Put Options
In accordance with IAS 32, financial instruments that entitle the holder to repayment of
the capital made available to the company must be classified as liabilities. In companies
that operate as limited partnerships, shareholders have the right (under German law) to
demand repayment of the capital they have made available to the company. This rightcannot be excluded by the shareholders’ agreement. Put options create a similar
obligation pursuant to IAS 32.
a) Put options
Where the right to terminate minority interests exists in the form of a put option, thecorresponding portion of minority interests is not derecognized but is treated as acomponent of equity during the fiscal period. Accordingly, a share of net income for the
fiscal year is also allocated to minority interests. At every closing date, it is assumed thatthe put option will be exercised; the corresponding minority interests are reclassified fromequity to financial liabilities. This financial liability is recognized in the amount of theprobable compensation obligation and measured at fair value. The difference between
this liability and minority interests as a share of equity is treated as an ongoing businesscombination and is stated as goodwill.
b) Limited partnerships
As with the procedure adopted for put options, these interests are also treated ascomponents of equity during a given fiscal year. A share of net income is also allocatedto minority interests. At the balance sheet date, it is assumed that the right to terminate
the investment will be exercised. The corresponding minority interests are therefore
reclassified from equity to financial liabilities, which are measured at amortized cost.
If minority interests in the share capital of limited partnerships are terminated or if
corresponding put options are exercised, the financial liabilities recognized priorFinancial Report | 113

to termination/exercise of the put options are reclassified as other (non-interest-bearing) liabilities.

Presentation Changes in the Consolidated Statement of Income
In the fiscal year under review, presentation of the interest result was for the first time split
into interest income and interest expenses items. This was done to show more clearly thecost of financing in the consolidated statement of income.

Presentation Changes in the Consolidated Cash Flow Statement
In fiscal 2008/09, interest received, interest payments, tax payments and dividends
received were for the first time presented as separate items in the consolidated cash flow
statement (under cash flow from operating activities). In addition, non-cash valuation
effects relating to bonds, liabilities due to banks, other financial receivables and otherfinancial liabilities were for the first time subsumed under “Other non-cash items.” In thepast, cash inflows and outflows relating to bonds and liabilities due to banks were netted.
Now, however, they are shown as separate items.
These changes necessitated adjustments to the consolidated cash flow statement forthe previous fiscal year. Cash flow from operating activities increased by € 817 thousand,cash flow from investing activities declined by € 1 324 thousand and cash flow fromfinancing activities increased by € 507 thousand.

Estimates and Discretionary Assessments by Management
Some accounting methods require critical estimates that involve complex and subjective
assessments and the use of assumptions, some of which are inherently uncertain andprone to change. These critical accounting estimates can vary from period to period andsignificantly impact a company’s financial situation and/or earnings. The management
explicitly points out that future events will often deviate from planning assumptions, andthat it is normal for estimates to have to be adapted.
Significant estimates and assumptions have to be made in the following areas ofaccounting:Realization of sales revenues on long-term construction contracts
Much of the business done by Voith Hydro and Voith Paper takes the form of construction
contracts. By contrast, this happens only in special cases at Voith Industrial Services. The

114 | Voith Annual Report 2008/2009

Group generally accounts for construction contracts using the percentage-of-completion(PoC) method, according to which sales are recognized to the extent that contractual
performance is realized. Accurate estimates of the percentage of completion are of vital
importance to this method. Depending on the method used to measure the progress ofthe contract, the most significant estimates concern the total cost of the contract, theremaining costs up to completion, the total value of the order, and order-related risks.
The management of Voith’s operating companies constantly screens all estimates thatare essential to the accounting of construction contracts and adapts them as and whennecessary.
Such examinations are part of management’s normal accounting activities at
operating level.
For details of carrying amounts, refer to note 14.
Trade accounts receivable and other receivables
Allowances for doubtful receivables require extremely good judgment on the part ofmanagement. They also necessitate an analysis of the individual debtors that covers
their creditworthiness, current economic trends and an examination of historic default
scenarios. For details of carrying amounts, refer to notes 14 and 15.
Impairments of goodwill
Calculating the recoverable amount for a Group Division to which a certain amount of
goodwill is assigned requires management to make estimates. To calculate the value in
use, planning for the next six periods is based on management’s expectations adjusted
for economic trends and historic developments. Estimates of growth, the weighted
average cost of capital and tax rates are likewise based on reliable information that reflects
the risks associated with operating business in each given industry or division. For detailsof carrying amounts, refer to note 10.
Development costs
Development costs are capitalized if the recognition criteria in IAS 38 are met. Initial
capitalization is based on management’s estimate of whether there is reasonable evidenceof technical and economic feasibility. Forecasts of the expected future economic benefit
to be gained from assets are essential to the decision whether or not costs are to becapitalized. For details of carrying amounts, refer to note 10.
Pension obligations
Estimates of pension obligations depend significantly on key assumptions about discountfactors, expected returns on plan assets, expected salary increases, mortality rates andthe trend in healthcare costs. The assumptions used to calculate the discount factor
reflect the interest rates that can be realized on high-quality fixed-income instruments withFinancial Report | 115

appropriate maturities. Assumptions regarding expected returns on investments are
determined by a uniform base that takes account of long-term historic returns and thestructure of the portfolio. For details of carrying amounts, refer to note 20.
Other provisions
Significant estimates influence the formation of provisions for anticipated losses on
construction contracts, warranty-related costs and litigation. Voith forms provisions in allcases where current estimates of the total cost of an order exceed expected revenues
from the order. Such estimates are subject to change in light of new information regarding
project progress. Onerous contracts are identified by monitoring project progress andconstantly updating estimates of total costs, all of which requires good judgment if certain
performance standards are to be reached. These estimates also include warranty-related
and litigation costs. Provisions for restructuring are based on well-founded plans for
expected activities. These plans are reviewed and approved by the Board of Management.
For details of carrying amounts, refer to note 21.
Taxes
The Voith Group has business operations in many countries and is subject to manydifferent tax laws. Both actual and deferred taxes on income must be calculated for eachindividual taxable entity. To calculate deferred tax assets on losses carried forward andtemporary differences, for example, assumptions must be made about the possibility ofrealizing sufficient taxable income in the future. It is also necessary to rightly interpretcomplex tax legislation. For details of carrying amounts, refer to note 9.
Outside Germany, Voith has substantial refund claims with regard to sales tax (valueadded tax) that has already been paid. These payments can normally be netted against
the sales tax that is charged on domestic sales. Since our Brazilian subsidiary has sucha strong focus on exports, however, its refund claims cannot be fully offset against the
charged sales tax that it must pass on to the revenue authorities. Realization of theseclaims therefore depends on government approval of resale activities. Since the timing ofsuch approval is very uncertain, expected future cash flows have to be discounted basedon management’s estimates. In light of the prevailing uncertainty, a cautious valuation has
been adopted.

116 | Voith Annual Report 2008/2009

Adoption of Amended and New Standards and Interpretations
There were no new standards or interpretations that had to be taken into account for the
first time in fiscal 2008/09.
Adoption of the following new and amended IFRSs and IFRICs was not yet
compulsory in fiscal 2008/09 and/or had not yet been endorsed by the European
Commission for adoption in the European Union.
Amendments to IAS 1: Presentation of Financial Statements
The amendment to IAS 1 is intended to make financial statements more readily comparable and to make it easier for the users of these statements to analyze them. IAS 1 lays
out the ground rules for the presentation and structure of financial statements. It has also
revised the minimum requirements for the content of financial statements. Adoption of therevised version of this standard is compulsory for fiscal years beginning on or afterJanuary 1, 2009.
Amendments to IAS 23: Borrowing Costs
Essentially, the revised version eliminates the option of recognizing borrowing costs as
expenses for certain assets. As a result, borrowing costs that can be assigned directly
to qualifying assets are to be capitalized as acquisition and production costs. This
amendment is to be adopted for borrowing costs assignable to qualifying assets that are
to be capitalized beginning on or after January 1, 2009. Since Voith currently recognizes
borrowing costs as expenses, the carrying amounts of qualifying assets are expected toincrease in future.
Amendments to IAS 32: Financial Instruments: Presentation and IAS 1:
Presentation of Financial Statements
These amendments concern the distinction between equity and debt and the way in which
both are to be reported. In future, certain instruments that can be “put” by the holder will
have to be classified as equity rather than debt if they meet specified conditions. Adoptionof the amendments to IAS 32 and IAS 1 is compulsory for fiscal years beginning on orafter January 1, 2009.
Amendments to IFRS 2: Share-Based Payment
The changes made to IFRS 2 concern the reporting of the conditions governing exercise
and cancellations and changes to cash-settled share-based payments. Since the Group
does not use share-based compensation, these amendments have no impact on thefinancial statements of the Voith Group.

Financial Report | 117

Amendments to IFRS 3: Business Combinations and IAS 27: Consolidated
Financial Statements and Accounting for Investments in Subsidiaries
The revised version of IFRS 3 alters the way in which the purchase method is applied tobusiness combinations. Significant changes concern the measurement of minority
interests, the recognition of step acquisitions, and the accounting treatment of conditional
components of the purchase price, as well as incidental costs. Significant changes to IAS
27 concern the accounting treatment of transactions in which one company maintains
control and of transactions in which control is lost. Adoption of the revised standards iscompulsory for fiscal years beginning on or after July 1, 2009. Voith is currently
investigating how adoption of these amendments will affect presentation of the Group’s
assets, financial and earnings position, especially with regard to the accounting treatmentof put options and minority interests in limited partnerships.
IFRS 7: Financial Instruments: Disclosures
The provisions of IFRS 7 regarding how to report the fair value of financial instruments
have been expanded. This amendment concerns the introduction of a three-tiered fairvalue hierarchy for reporting purposes. Distinctions are drawn between fair values basedon the nature of the input parameters used for valuation, thereby revealing the extent towhich observable market data is available for calculation of fair values. The updated
provisions also aim to improve disclosures concerning liquidity risks by clearly delimiting
the scope of liabilities to be displayed in tables of maturities. Adoption of theseamendments is compulsory for fiscal years that begin on or after January 1, 2009.
IFRS 8: Operating Segments
IFRS 8 replaces IAS 14 (Segment Reporting). The main difference to IAS 14 is the use of
the full management approach to distinguish between and present relevant segment
information. As a result, segment reporting will in future reflect Group-internal reporting
structures. By contrast, IAS 14 required relevant information to be prepared in line withthe accounting policies used to prepare the consolidated financial statements. Adoptionof this standard is compulsory for fiscal years beginning on or after January 1, 2009.
IFRIC 9 and IAS 39: Embedded Derivatives
The changes made to IFRIC 9 clarify the accounting treatment of embedded derivatives
for companies that make use of the amendment to reclassification practices published in
October 2008. Pursuant to the latter amendment, companies are now permitted, undercertain circumstances, to reclassify certain financial instruments that were formallycategorized as “fair value through profit and loss.” The changes made to IFRIC 9 and
IAS 39 clearly state that all embedded derivatives that were reclassified from the category“fair value through profit and loss” must be revalued and, where necessary, statedseparately in the financial statements. Adoption of these amendments is compulsory forfiscal years beginning on or after June 30, 2009. Voith is not affected by these changes.

118 | Voith Annual Report 2008/2009

IFRIC 12: Service Concession Arrangements
IFRIC 12 deals with arrangements whereby government organizations grant contracts to
private enterprises for the supply of public services. IFRIC 12 governs the ways in which
private-sector companies must account for the rights and duties arising from thesearrangements. Adoption of this standard is compulsory for fiscal years beginning on orafter March 29, 2009.
IFRIC 13: Customer Loyalty Programs
This interpretation concerns itself with the reporting of customer loyalty programs in whichcustomers are awarded points (credits) that allow them to obtain free or discounted goods
or services. Adoption of IFRIC 13 is compulsory for fiscal years beginning on or after
December 31, 2008.
IFRIC 14: IAS 19—The Limit on Defined Benefit Asset Minimum Funding
Requirements and Their Interaction
This interpretation governs the measurement of assets that arise when plan assets exceed
pension obligations. It also specifies how companies are to account for obligations tomake minimum contributions to pension plans. Adoption of IFRIC 14 is compulsory forfiscal years beginning on or after December 31, 2008.
IFRIC 15: Agreements for the Construction of Real Estate
IFRIC 15 addresses the issue of when revenue and the related costs arising from the saleof units of real estate are to be realized in cases where agreements have been reached
between the project developer and the buyer before completion of the construction phase.
Adoption of IFRIC 15 is compulsory for fiscal years beginning on or after January 1, 2009.
IFRIC 16: Hedges of Net Investment in a Foreign Operation
This interpretation applies to companies that hedge the foreign currency risk arising fromtheir net investments in foreign operations. In particular, IFRIC 16 states that thisinterpretation is not to be applied by analogy to other types of transaction that are carried
as hedge relationships. Adoption of IFRIC 16 is compulsory for fiscal years that begin on
or after June 30, 2009.
IFRIC 17: Distributions of Non-Cash Assets to Owners
IFRIC 17 governs the reporting of the liabilities that must be formed for non-cash
dividends when distribution of such dividends is no longer a discretionary decision on thepart of the company. Adoption of this interpretation is compulsory for fiscal years
beginning on or after July 1, 2009.

Financial Report | 119

IFRIC 18: Transfers of Assets from Customers
This interpretation deals with the accounting treatment of arrangements whereby acompany receives from a customer an item of property, plant and equipment that thecompany must then use either to connect the customer to a network or to provide thecustomer with ongoing access to a supply of goods or services. Adoption of IFRIC 18 iscompulsory for transactions conducted on or after July 1, 2009. The interpretation must
be applied prospectively.
Annual improvements process—May 2008 and April 2009
In May 2008 and April 2009, IASB published an assortment of isolated amendments
to various IFRS in the context of its annual improvements process. The changes essentiallyconcern terminological and editorial issues. Adoption of the May 2008 amendments
is compulsory for fiscal years beginning on or after January 1, 2009. Adoption of theApril 2009 amendments is compulsory for fiscal years beginning on or after July 1, 2009,or, in some cases, on or after January 1, 2010.
Adoption of IFRS 8 will lead to modifications and extensions to the notes to theconsolidated financial statements. IFRIC 12, 13, 14, 15, 16, 17 and 18 will probably haveno material impact on the Group’s assets, financial and earnings position. Voith is currently
investigating how adoption of the other new standards will affect its consolidated financial
statements.
At present, the Voith Group does not plan to adopt the new standards prematurely.

120 | Voith Annual Report 2008/2009

(1) SALES
By division€ in thousands

2008/09

2007/08

Voith Hydro

1 084 559

799 921

Voith Industrial Services

1 018 483

983 441

Voith Paper

1 743 216

1 984 338

Voith Turbo

1 232 234

1 161 362

5 078 492

4 929 062

4 878

4 705

5 083 370

4 933 767

Notes to theConsolidated Statementof IncomeCore Business

Other

By region€ in thousands

2008/09

2007/08

Germany

1 133 960

1 187 415

Europe excluding Germany

1 480 752

1 408 026

Americas1 163 025

1 102 964

Asia

1 216 366

1 152 524

Others

89 26782 8385 083 370

4 933 767

Services totaling € 1794 million (previous year: € 1 795 million) are included in the sales
figure.

(2) DECREASE/INCREASE IN INVENTORIES AND OTHER CAPITALIZED COSTS€ in thousands

2008/09

2007/08

Change in inventory of finished goods
and work in progress(25 187)

102 162

Other capitalized costs

19 86921 640(5 318)

123 802

Financial Report | 121

(3) OTHER OPERATING INCOME€ in thousands

2008/09

2007/08

Income from the use of orderspecific provisions

78 04884 058

Income from the reversal of provisions

86 977

92 633Foreign exchange gains

100 469

91 113

Recovered bad debts

9 521

10 004

Gains on the disposal of non-current
and current assets

2 644

3 346

Other income

79 31562 099356 974343 253

Gains on the disposal of non-current and current assets include no gains (previous
year: € 0) from the disposal of assets held for sale.

(4) COST OF MATERIAL€ in thousands

2008/09

2007/08

Expenditure for raw materials, supplies
and purchased goods

1 685 790

1 747 186

443 594

470 028

2 129 384

2 217 214

Expenditure for purchased services(5) PERSONNEL EXPENSES€ in thousands

2008/09

2007/08

Wages and salaries

1 435 971

1 425 745

331 989

314 415

1 767 960

1 740 160

Social security, employee benefits andrelated charges

122 | Voith Annual Report 2008/2009

Zahl der Mitarbeite
Numberof employees
Average for the fiscal year

At the balance sheet date

2008/09

2007/08

2009-09-30

2008-09-30

Industrial employees

24 98125 95823 85027 949

Salaried employees

15 31114 25215 47915 00640 29240 21039 32942 955

1 196

1 174

1 196

1 174

41 48841 38440 52544 1292008/09

2007/08

2009-09-30

2008-09-30

Germany

17 62817 84416 79018 667

Europe excluding Germany

8 070

8 969

7 691

9 584

Americas

10 861

10 03411 00411 109

Asia

3 542

3 168

3 647

3 399

Others

191

195

197

196

40 29240 21039 32942 955

Apprentices and trainees

Number of employees by region
Zahl der Mitarbeiter nach Regionen
Average for the fiscal year

At the balance sheet date(6) OTHER OPERATING EXPENSES€ in thousands

2008/09

2007/08

Increase in provisions

210 101

178 949

Other selling expenses

313 368

316 039

Other administrative expenses

227 040

228 562

Foreign exchange losses

123 892

83 206

Rent for buildings and machinery

63 11656 832

Allowances for bad debts

23 481

9 268

Losses on disposal of non-current
and current assets

3 866

2 884

Other expenses

97 177

139 327

1 062 041

1 015 067

Financial Report | 123

(7) NON-RECURRING RESULTThe non-recurring result includes expenses incurred for major restructuring activities andretrenchments.
The reported effects are essentially the result of actions initiated in fiscal 2008/09. Voith
Industrial Services, Voith Paper and Voith Turbo are the affected segments which havereacted to the changed market conditions to maintain profitability and also to create
conditions for a sustained increase in their competitiveness.
To a small extent, the reported effects also include the effects of actions initiated inprevious fiscal years whose ongoing progress led to further expenses for which provisions
could not be formed in preceding years.
The table below provides a detailed breakdown of these expenses:€ in thousands

2008/09

2007/08

Personnel expenses(91 485)(9 432)

Depreciation(3 176)(42)

Other expenses(3 813)(7 848)

Income from reversal of provisions

702

4 147

Other income

148

5 148

(97 624)(8 027)

2008/09

2007/08

Income from investments

1 127

1 554

Write-downs on investments in shares(6 067)

(144)

310

(549)

(8) OTHER FINANCIAL RESULT€ in thousands

Write-downs/write-ups on long-term loans
Write-downs on marketable securities
Income from marketable securities and loans(13 804)

(10)

662

618

(17 772)

1 469

Write-downs on investments in shares concern available-for-sale financial instrumentsthat are measured at amortized cost.

124 | Voith Annual Report 2008/2009

(9) INCOME TAXES€ in thousands

2008/09

2007/08

Effective taxes(88 833)(91 576)

Deferred taxes

10 5179 497(78 316)(82 079)

Effective taxes include domestic income taxes and comparable foreign income taxes thatare calculated in accordance with the local tax laws valid for each subsidiary company.
For individual Group companies, deferred tax items are recognized for timing
differences between carrying amounts for tax purposes reporting and the carrying
amounts recognized in IFRS, as well as for consolidation measures recognized in profit
and loss. Deferred tax assets are also recognized for tax losses carried forward that canbe reasonably expected to be realized in the near future. The average income tax rate forGerman companies is 29.84% (previous year: 29.84%)
Deferred taxes are calculated at the tax rates valid in the respective countries.
In the period under review, deferred tax expenses arising from temporary differences
amounted to minus € 18 474 thousand (previous year: € 10 627 thousand). The reversalof write-downs on deferred tax assets on losses carried forward resulted in deferred tax
income of € 13 223 thousand (previous year: € 19 885 thousand).
As at September 30, 2009, tax losses carried forward of € 301 729 thousand (previous
year: € 198 300 thousand) for German corporate taxes, plus € 283 905 thousand (previous
year: € 326 090 thousand) for German trade tax, plus € 59 756 thousand (previous year:€ 0) for interest expenses that were hitherto not tax-deductible under German law, and€ 55 318 thousand (previous year: € 55 983 thousand) for foreign taxes were notrecognized as deferred tax assets as there was no reasonable expectation that the related
deferred tax assets would be realized in the future. In Germany, losses carried forward do
not expire. Outside Germany, losses carried forward can normally be realized within no
more than five to ten years. In the period under review, tax losses carried forward in theamount of € 2 948 thousand (previous year: € 3 266 thousand) were realized for which nodeferred tax assets were formed in the previous year.

Financial Report | 125

The following table provides a detailed overview of deferred tax items at the balance
sheet date:2009-09-30
Aktive latente Steuern€ in thousands

2008-09-30

Passive latente

Deferred tax assets

Deferred tax liabilities

Deferred tax assets

Deferred tax liabilities

Intangible assets

11 81062 43213 23430 923

Property, plant and equipment

3 378

52 4627 892

83 592

Investments and marketable securities

10 595

760

3 552

1 466

Inventories and receivables

33 50951 07353 16887 602Other assets

14 18223 0389 069

34 700Pension provisions

38 836

1 439

36 7072 174

Financial liabilities

192

17 69715 6132 688

15 42778 48919 857

Steuern

Other provisions and liabilities

89 919

Write-down on deferred tax assets
arising from temporary differences(12 853)(17 007)

Tax losses carried forward

51 10559 706

Netting(112 140)(112 140)(140 372)(140 372)

Balance sheet figure

128 533

112 188

120 051

122 630

126 | Voith Annual Report 2008/2009

Reconciliation of expected and actual tax expenses:
The income of Voith AG and its subsidiaries in Germany is subject to corporation income
tax and trade tax. Profits earned outside Germany are taxed at the current rates valid in
the countries concerned. Expected tax expenses in the period under review were
calculated based on a tax rate of 29.84% (unchanged from the previous year), which takes
into account the structure of the Voith Group.

€ in thousands

2008/09

2007/08

Income before taxes

155 694

226 348

Expected tax expenses

46 45967 542

Deviations from expected tax rates(5 465)5 497

Effects of changes in tax rates

1 033

3 377

Tax-free income(17 649)(38 480)

Non-deductible expenses

38 38930 557

Taxes relating to other reporting periods(5 498)

3 651

Change in write-downs on deferred
tax assets

24 644

5 693

Other tax effects(3 597)

4 242

Taxes on income

78 31682 079Effective tax rate (%)

50.3%

36.3%

Deferred taxes of € 11 049 thousand (previous year: € 9 668 thousand) relating to temporary differences of € 736 569 thousand (previous year: € 664 871 thousand) arising on
investments in subsidiaries were not recognized in the balance sheet, since the criteria
specified in IAS 12.39 were met.

Financial Report | 127

Konzernbilanz
Notes to the ConsolidatedErläuterungen
BalancezurSheet(10) Immaterielle Vermögenswerte
Entwicklung der immateriellen Vermögenswerte vom 2007-10-01 bis zum 2008-09-30(10) INTANGIBLE ASSETS

Development of intangible assets from October 1, 2007, to September 30, 2008

Franchises,
trademarks,
patents,
licenses andsimilar rights(including
licenses tosuch rights)

Cost as at 2007-10-01

Changes in Group structure

Goodwill

Development
costs

Advances paid
for intangible
assetsTotal

124 325

540 01354 353144

718 835

18 22892 5790

0

110 807(404)(3 677)(73)

0(4 154)

Additions

10 0060

17 021263

27 290

Disposals(1 555)

0

(72)

0

(1 627)

Other adjustments

2 229(13 154)0

0(10 925)

Transfers

3 122(2 761)00361

Cost as at 2008-09-30

155 951613 000

71 229407

840 587

Accumulated depreciation as
at 2007-10-01(66 680)(54 179)(15 702)(2)(136 563)

Currency translation differences

431

0

49

(1)

479

€ in thousands

Currency translation differences

Current depreciation(17 625)

0(11 613)0(29 238)

Disposals

821

0

0

0

821

Transfers

79

0

0

0

79

Accumulated depreciation as
at 2008-09-30(82 974)(54 179)(27 266)(3)(164 422)

Carrying amounts as at
2008-09-30

72 977558 82143 963404

676 165

128 | Voith Annual Report 2008/2009

Entwicklung der immateriellen Vermögenswerte vom 2008-10-01 bis zum 2009-09-30

Development of intangible assets from October 1, 2008, to September 30, 2009

€ in thousands
Cost as at 2008-10-01

Changes in Group structure

Franchises,
trademarks,
patents,
licenses andsimilar rights(including
licenses tosuch rights)

155 951

Goodwill

Development
costs

Advances paid
for intangible
assetsTotal

613 000

71 229407

840 587

1 027

364

0

0

1 391

256

(2 784)(21)

0(2 549)Additions

9 448

0

18 3202 937

30 705

Disposals(8 119)0(6 799)(53)(14 971)

Currency translation differences

Other adjustments

86

21 02900

21 115

6 097

(569)

0

(61)

5 467

Cost as at 2009-09-30

164 746631 04082 7293 230

881 745

Accumulated depreciation as
at 2008-10-01(82 974)(54 179)(27 266)(3)(164 422)

Currency translation differences

(269)

0

2

(1)

(268)

Transfers

Current depreciation(16 603)0(11 588)0(28 191)

Disposals

7 270

0

6 630

0

13 900Transfers

(570)

0

0

4

(566)

Accumulated depreciation as
at 2009-09-30(93 146)(54 179)(32 222)0(179 547)

Carrying amounts as at
2009-09-30

71 600576 861

50 5073 230

702 198

The “other adjustments” in the table above essentially reflect changes to goodwill arisingfrom the accounting treatment of put options for minority interests.
No impairment losses were recognized in respect of goodwill on the basis of
impairment tests performed.

Financial Report | 129

Impairment losses of € 3 762 thousand (previous year: € 4 796 thousand) were recognizedon development costs, as sufficient potential for use within the framework given by
calculations of the recoverable amount no longer exists. Of these impairments, € 3 682
thousand (previous year: € 4 209 thousand) concerned Voith Paper and € 80 thousand(previous year: € 0) concerned Voith Industrial Services. In the previous fiscal year,
impairment losses totaling € 587 thousand also affected Voith Turbo.
Sachanlagen
Entwicklung der Sachanlagen vom 2007-10-01 bis zum 2008-09-30(11) PROPERTY, PLANT AND EQUIPMENT

Development of property, plant and equipment from October 1, 2007, to September 30, 2008
Land, leasehold
rights andbuildings(including
buildings on
third-party land)Technical
equipment,
plant andmachinery

Fixtures,furniture andofficeequipment

Advancepayments andconstructionin progressTotal

582 518

1 109 153

399 503

68 2402 159 414

7 021

4 590

3 862

228

15 701

Currency translation differences(4 107)(16 467)(2 846)326(23 094)

Additions

34 75857 84463 06398 323253 988

Disposals(13 796)(18 823)(13 921)(2 210)(48 750)

Transfers

24 99723 2434 993(53 594)

(361)

(776)

(3 380)993

22(3 141)

Cost as at 2008-09-30

630 615

1 156 160

455 647

111 335

2 353 757

Accumulated depreciation
as at 2007-10-01(274 380)(757 212)(285 789)

0(1 317 381)

2 484

12 2092 006

016 699€ in thousands
Cost as at 2007-10-01

Changes in Group structure

Other adjustments

Currency translation differences
Current depreciation(15 162)(57 771)(41 849)

0(114 782)

Disposals

5 978

15 916

11 706033 600Transfers

(109)

(873)

903

0

(79)

Write-ups

0

1 224

238

0

1 462

776

3 633

(567)

0

3 842

Accumulated depreciation
as at 2008-09-30(280 413)(782 874)(313 352)

0(1 376 639)

Carrying amount as at
2008-09-30

350 202373 286

142 295

111 335

977 118

Other adjustments

130 | Voith Annual Report 2008/2009

Entwicklung der Sachanlagen vom 2008-10-01 bis zum 2009-09-30

Development of property, plant and equipment from October 1, 2008 to September 30, 2009

€ in thousands
Cost as at 2008-10-01

Changes in Group structure

Land, leasehold
rights andbuildings(including
buildings on
third-party land)Technical
equipment,
plant andmachinery

Fixtures,furniture andofficeequipment

Advancepayments andconstructionin progress

Total

630 615

1 156 160

455 647

111 335

2 353 757

0

0

33

0

33

Currency translation differences(3 964)(9 512)(2 508)(448)(16 432)

Additions40 55865 85445 46571 980223 857

Disposals(12 368)(54 283)(29 772)(5 629)(102 052)

Transfers

18 52247 7865 178(76 953)(5 467)

Other adjustments

6 083(1 098)

646

1 469

7 100

Cost as at 2009-09-30

679 446

1 204 907

474 689

101 754

2 460 796

Accumulated depreciation
as at 2008-10-01(280 413)(782 874)(313 352)

0(1 376 639)

2 320

9 484

2 191

0

13 995Currency translation differences
Current depreciation(16 890)(66 349)(43 025)0(126 264)

Disposals

7 117

51 86925 145084 131

Transfers

(160)

418

308

0

566

Write-ups

0

0

0

0

0

Other adjustments

0

2 469

0

0

2 469

Accumulated depreciation
as at 2009-09-30(288 026)(784 983)(328 733)

0(1 401 742)

Carrying amount as at
2009-09-30

391 420419 924

145 956

101 754

1 059 054

Financial Report | 131

Impairment losses of € 7 990 thousand due to the restructuring of locations and the
shutdown/scrapping of plants were recognized during the fiscal year under review(previous year: € 10 199 thousand). A significant portion of this amount related tomachinery, office equipment and buildings. Of the total impairment loss, € 3 176 thousand(previous year: € 42 thousand) was recognized in the non-recurring result in profit and loss.
Impairment losses in the fiscal year under review affected Voith Paper in the amount of€ 6 923 thousand (previous year: € 5 071 thousand), Voith Hydro in the amount of € 0(previous year: € 159 thousand), Voith Turbo in the amount of € 87 thousand (previous
year: € 0) and Voith Industrial Services in the amount of € 980 thousand (previous year:€ 133 thousand). No impairment losses affected the Group’s holding companies in fiscal
2008/09 (previous year: € 4 836 thousand).
Advance payments and construction in progress relate to the following assets:€ 34 718 thousand for buildings (previous year: € 34 069 thousand), € 65 264 thousand fortechnical equipment, plant and machinery (previous year: € 70 803 thousand) and € 1 772
thousand for non-production equipment (previous year: € 6 463 thousand).
The other adjustments include assets that were stated as held-for-sale assets in theprevious year. Since they were not sold in the course of the past 12 months, they havenow been reclassified as property, plant and equipment. Write-downs totaling € 84
thousand affected these capitalized assets in the period under review. Had they been
capitalized in the previous fiscal year, write-downs totaling € 59 thousand would havebeen incurred.
Land in the amount of € 2 417 thousand (previous year: € 0) is held in pledge.
Property, plant and equipment includes the following assets:
Finance leases€ in thousands

2009-09-30

2008-09-30

3 736

4 976

Land
Technical equipment, plant and machinery

664

925

Fixtures, furniture and office equipment

1 719

2 453

6 119

8 354

Buildings, plant, machinery and office and other equipment classified as finance leases
are stated under this item. The corresponding leasing liabilities are shown as financial
liabilities. Depreciation totals € 1 133 thousand (previous year: € 1 325 thousand).
No contingent rents were recognized in profit and loss.

132 | Voith Annual Report 2008/2009

(12) INVESTMENTS IN ASSOCIATED COMPANIES/OTHER INVESTMENTS
Development of investments in associated companies/other investmentsfrom October 1, 2007, to September 30, 2008

€ in thousands

Investments inassociatedcompanies

Other
investments

Long-term
loans

Total

4 818

59 11910 85774 794

390

1 141

0

1 531

0

(30)

(229)

(259)

Cost as at 2007-10-01
Changes in Group structure
Currency translation differences
Additions

9 435

10 3081 180

20 923

Disposals0(12 448)(4 136)(16 584)

Transfers

0

0

0

0

Other adjustments

0(8 230)0(8 230)14 64349 8607 672

72 175

Accumulated depreciation as at
2007-10-01

0(27 985)(2 934)(30 919)

Currency translation differences

0

10

80

90

Current depreciation

0

(144)

(549)

(693)

Disposals

0

9 075

0

9 075

Accumulated depreciation as at
2008-09-30

0(19 044)(3 403)(22 447)

14 64330 8164 269

49 728

Cost as at 2008-09-30

Carrying amount as at 2008-09-30

Development of investments in associated companies/other investmentsfrom October 1, 2008, to September 30, 2009
Investments inassociatedOthercklungder Finanzanlagen vom 2007-10-01 bis zum
2008-09-30investments
companies€ in thousands

Cost as at 2008-10-01

14 643ung
der Finanzanlagen
Changesin Group structure vom 2008-10-01 bis zum 2009-09-30
0

49 860Long-term
loans

Total

7 672

72 175

0

0

0

105

(13)

(4)

88

Additions

3 391

2 885

3 120

9 396

Disposals(1 420)

(209)

(922)

(2 551)

Currency translation differences

Transfers
Other adjustments
Cost as at 2009-09-30

0

0

0

0

489

(5 042)0(4 553)17 20847 4819 866

74 555

Accumulated depreciation as at
2008-10-010(19 044)(3 403)(22 447)

Currency translation differences

0

0

6

6

Current depreciation

0(6 067)309(5 758)

Disposals

0

79

21

100

Accumulated depreciation as at
2009-09-30

0(25 032)(3 067)(28 099)

17 20822 4496 799

46 456

Carrying amount as at 2009-09-30

Financial Report | 133

The disposal of other investments generated book profits of € 211 thousand (previous
year: € 490 thousand). Since their fair value could not be reliably estimated, theseinvestments had previously been recognized at amortized cost.
The table below aggregates the key data for the associated companies measured
using the equity method.
Enova
Premier 1)

Enova
Premier 1)

Enova€ in thousands

2009-09-30

Enova

2008-09-30

ImfuyoProjects 1)

ImfuyoProjects 1)

Imfuyo Imfuyo Terne AS
2009-09-30

Terne AS

Terne AS

2008-09-30

2009-09-30

Terne AS

2008-09-30

Equity

5 441

5 917

3 596

2 481

2 591

1 526

Liabilities

41 11140 037

2 978

4 356

3 800

3 566

Total equity and liabilities

46 55245 954

6 574

6 837

6 391

5 092

Sales

227 056

246 296

10 435

10 38019 755

13 510

1 511

4 457

855

1 180

940

1 190

SMI Technologies

SMI Technologies

GAW
Pildner

GAW
PildnerOx-traction 1)

SVK 1)

2009-09-30

2008-09-30

2009-09-30

2008-09-30

2008-09-30

2009-09-30

Equity

953

686

9 486

13 559935

73

29 845

Liabilities

607

499

18 30212 715

4 807

1 178

2)

1 560

1 185

27 78826 274

5 742

1 251

59

6

27 41938 525

165

3

9 456

(932)

(414)

927

871

(551)

(836)

3 328

Net income€ in thousands

Total equity
and liabilities
Sales
Net income

Ox-traction 1)

2009-09-30

1) Including associated companies.
2) Liabilities data not available at September 30.

(13) INVENTORIESInventories consist of the following items:€ in thousands

2009-09-30

2008-09-30

Raw materials and supplies

251 463

293 667

Work in progress

326 613343 856

Finished goods and merchandise

116 152

154 611

Payment in advance to suppliers

138 878

131 945833 106

924 079

Inventories totaling € 112 800 thousand were stated at their net realizable value (previous
year: € 240 369 thousand).

134 | Voith Annual Report 2008/2009

Impairments on inventories amounted to € 21 388 thousand (previous year: € 53 578
thousand) and were recognized as expenses. Write-ups (reversals prescribed by IFRS)
totaling € 8 747 thousand (previous year: € 1 856 thousand) were effected. These amounts
are included in the cost of materials.
No inventories were assigned as collateral in the period under review (carrying amountin the previous year: € 2 113 thousand).

(14) TRADE RECEIVABLES

Trade receivables consist of the following items:€ in thousands

2009-09-30

2008-09-30

Trade receivables

717 544758 506

Write-downs on receivables(45 735)(32 361)

Receivables from
customer-specific contracts

288 679415 597

960 488

1 141 742

Trade receivables are classified as current assets. As at September 30, 2009, the volumeof receivables that was not expected to be realized within one year was € 89 889 thousand(previous year: € 81 369 thousand).
No trade receivables were interest-bearing either in the period under review or theprevious fiscal year.
No trade receivables (previous year: € 2 527 thousand) serve as securities for liabilities.
Write-downs on trade accounts receivable developed as follows:€ in thousands

2009-09-30

2008-09-30

Write-downs at start of fiscal year

(32 361)(38 735)

Additions(20 299)(7 683)

Utilization

2 321

7 705

Reversals

4 489

6 435

115

(83)

(45 735)(32 361)

Changes in Group structure/translation adjustments
Write-downs at end of fiscal year

All additions in the amount of € 20 299 thousand (previous year: reversals in the amountof € 6 435 thousand) consist of individual allowances totaling € 19 057 thousand (previous
year: reversals totaling € 5 413 thousand) and general allowances totaling € 1 242
thousand (previous year: reversals totaling € 1 022 thousand).
Credit insurance is used to manage default risk in trade receivables. In particular,
Hermes cover is used to secure receivables from foreign customers.

Financial Report | 135

Future receivables from customer-specific construction contracts recognized using thepercentage-of-completion method are determined as follows:
2009-09-30

2008-09-30 1)Aggregate amount of costs incurredand profits/losses incurredon customer-specific projects
in progress

3 835 144

2 314 619

Progress billings to date

(2 343 462)

(863 969)€ in thousands

Gross amount due from customers

1 491 682

1 450 650

Advances received (“progress billings”)(1 240 260)

(1 052 268)

251 422398 382

Thereof receivables fromconstruction contracts

270 631414 833

Thereof liabilities fromconstruction contracts(19 209)(16 451)

1) Data for the previous year adjusted. (The portion relating to customer-specific service contracts has

been eliminated from the presentation.)

Receivables from customer-specific service contracts total € 18 048 thousand. In theprevious year, net liabilities totaling € 355 thousand were recognized.
Advances received amounting to € 686 101 thousand (previous year: € 710 533 thousand1)) for which no contract costs have been incurred to date are included in liabilities.
None of these advances were received for service contracts.
1) Data for the previous year adjusted.

Sales relating to customer-specific contracts totaled € 2 049 179 thousand (previous year:€ 1 653 402 thousand). Sales relating to service contracts accounted for € 67 419 thousand of this amount (previous year: € 32 973 thousand). Amounts billed to customers areshown under trade receivables.
An amount of € 3 912 thousand (previous year: € 3 071 thousand) in trade receivable
is held as retentions by customers. Retentions are amounts of progress billings that are
not paid until conditions specified in the contract have been met.

136 | Voith Annual Report 2008/2009

(15) OTHER RECEIVABLES AND ASSETS

2009-09-30

2008-09-30

Derivatives with hedged
operational transactions

64 14836 561

Derivatives with hedged
financial transactions

30 82819 011

Financial receivables

40 434107 367€ in thousands

Other financial assets

2 002

2 675

Prepaid expenses

32 89533 711Other assets

193 468

232 613363 775

431 938

Since a significant portion of the other financial receivables are subject to variable interest
rates, their market values are largely equivalent to their carrying amounts.
At the balance sheet date, other assets totaling € 32 420 thousand (previous year:€ 30 353 thousand) served to secure liabilities and contingent liabilities. Recourse will bemade to this security if the underlying obligations are not fulfilled or if the contingent
liabilities are realized.
Write-downs on other receivables developed as follows:
2009-09-30

2008-09-30

Write-downs at start of fiscal year

(6 237)(4 672)

Additions(1 248)(2 237)

Utilization

148

316

Reversals

2 112

166

39

190

(5 186)(6 237)€ in thousands

Changes in Groupstructure/translation adjustments
Write-downs at end of fiscal year

Reversals totaling € 2 112 thousand (previous year: € 166 thousand) consist of the reversalof itemized allowances in the amount of € 1 990 thousand (previous year: € 331 thousand)and general allowances in the amount of € 122 thousand (previous year: minus € 165
thousand).

(16) MARKETABLE SECURITIESIn fiscal 2008/09, unrealized gains and losses of € 28.3 million (previous year: minus € 51.7
million) on available-for-sale securities were recognized in equity in revenue reserves. Dueto the realization of transactions in the course of the period under review, the relevant

Financial Report | 137

accumulated expenses and incomes in the amount of € 1.5 million (previous year: € 5.9
million) had to be reclassified from revenue reserves to profit and loss. At the balance
sheet date, a write-down of € 13.8 million (previous year: € 0) on available-for-salesecurities was recognized in profit and loss.
Available-for-sale securities totaling € 9 679 thousand (previous year: € 8 071 thousand) cover future pension obligations.

(17) CASH AND CASH EQUIVALENTS

This item mainly consists of time deposits held at banks.
€ in thousands

2009-09-30

2008-09-30

20

53

ChecksCash in hand

721

844

Notes receivable

16 894

6 338

Cash at banks

905 492

532 406

923 127539 641

Cash at banks earns interest at floating rates based on daily bank deposit rates.
Short-term deposits are made for varying periods of between one day and threemonths depending on the immediate cash requirements of the Group, and earn interestat the respective short-term deposit rates.
At the balance sheet date, the fair value of cash and cash equivalents was € 923 127
thousand (previous year: € 539 641 thousand).
At the balance sheet date, no cash at banks (previous year: € 446 thousand) served
as security for liabilities.

(18) NON-CURRENT ASSETS AND DISPOSAL GROUPS HELD FOR SALE

In the period under review, no assets were held for sale (previous year: € 6 700 thousand).
In the previous fiscal year, held-for-sale assets broke down as follows: developed land in
the amount of € 5 758 thousand belonging to Voith Industrial Services and machinery in
the amount of € 942 thousand belonging to Voith Hydro.

138 | Voith Annual Report 2008/2009

(19) EQUITY

Subscribed capital and revenue reserves
Since September 30, 2006, subscribed capital of € 120 000 thousand has, withoutchange, been held by shareholders in the form of 30 149 100 ordinary shares.
The revenue reserves consist of retained earnings generated by Voith AG and its
consolidated subsidiaries.
Other reserves
Other reserves include the effects of currency translation of foreign subsidiaries, theeffects of the valuation of marketable securities and cash flow hedges (pursuant to
IAS 39) and gains on the hedging of net investments (pursuant to IAS 21).
The table below lists the components of other reserves:€ in thousands€ in thousands

2009-09-30

2009-09-30

Unrealized gains/(losses)

2008-09-30

Unrealisierte Gewinne/Verluste

Market valuation of marketable securities
Cash flow hedges
Foreign exchange differences
Currency translation
Net investments in foreign subsidiaries

2007-09-30

2008-09-30

2007-09-30(1 713)(35 658)

19 234(1 676)(42 258)

3 517

(37)

6 600

15 717(17 163)(15 522)

259

5 670

(10 104)278(22 833)(5 418)(19)

Deferred taxes on items recognizeddirectly in equity

5 759(1 841)(6 596)

Minority interests(4 289)(4 066)(6 485)

Other reserves(17 406)(57 087)

6 412

Profit participation rights
Pursuant to the criteria defined in IAS 32, the Group’s profit participation rights, with anominal volume of € 83 400 thousand (previous year: € 76 800 thousand), constituteGroup equity. The rights in question are lower-ranking bearer profit participation rights
with variable compensation, no bullet maturity and no right of termination on the part ofthe creditors. The profit participation rights totaling € 6 600 thousand granted in the fiscal
year under review were issued by Voith AG. The profit participation rights that alreadyexisted in the previous year were issued by a subsidiary in fiscal 2006/07. Subject to theapproval of the appropriate governing body, profits totaling € 4.4 million are scheduled tobe distributed pursuant to profit participation rights.

Financial Report | 139

Minority interests
The major portion of minority interests is attributed to the co-owners of the companies Rif
Roll Cover Srl, Italy, Voith Fuji Hydro K.K., Japan, Voith IHI Paper Technology Co, Ltd.,
Japan, Voith Hydro Shanghai, Ltd., China, Voith Paper Technology (India) Ltd., India, Voith
Paper Fabrics India Ltd., India, and VG Power AB, Sweden.
Appropriation of net income at Voith AG
The Board of Management proposes to pay a dividend of € 0.33 per share (€ 9 949
thousand in total) out of the unappropriated retained earnings of Voith AG, and to carryforward the remaining € 21 154 thousand to the current fiscal year.
The dividend of € 18 089 thousand paid in the period under review (previous year:€ 12 350 thousand) was equivalent to a dividend of € 0.6 per share (previous year: € 0.4).
Additional capital management disclosures
Voith is a family-owned company. As such, it is obliged to maintain a robust and sustainable financial profile that enables the Group to meet its earnings and growth targets.
Voith manages capital with the aim of maximizing the return on capital. This also
involves optimizing the ratio of equity to financial liabilities (debt). Equity and financial
liabilities are those elements of Group capital that are of relevance to capital management
activities.
€ in thousands
EquityFinancial liabilities

2009-09-30

2008-09-30

953 895

861 687

1 404 007

1 017 132

2 357 902

1 878 819

Year on year, equity rose by 11% in the period under review. Net income and the factthat securities were marked to market made a positive contribution to the developmentof equity. Dividend payouts were the main negative factor. Financial liabilities increased
essentially because Voith added a further € 300 million to the € 300 million bond already in issue and due to mature in 2017, as well as issuing a note loan in the amount of€ 150 million.
Voith AG is not listed on a stock exchange and does not have any share-based
compensation plans. No specific capital requirements are defined in its Articles of
Association.

140 | Voith Annual Report 2008/2009

(20) PROVISIONS FOR PENSIONS AND SIMILAR OBLIGATIONSProvisions for pensions are recognized for benefits in the form of retirement, invalidity anddependents’ benefits payable under pension plans. The benefits provided by the Groupvary depending on the legal, tax and economic circumstances of the country concernedand usually depend on the length of service and remuneration of the employees.
Group companies provide occupational pensions under both defined contribution anddefined benefit plans. In the case of defined contribution plans, the company makes
contributions to state or private pensions schemes based on legal or contractual
requirements or on a voluntary basis. Once the contributions have been paid, there areno further obligations for the company. Current contributions are recognized as pension
expenses in the period concerned. In 2008/09, they amounted to € 117 619 thousand for
the Group as a whole (previous year: € 106 376 thousand).
Defined benefit plans make up the major portion of the pension plans. A distinction isdrawn between funded and unfunded plans.
The pension provisions for defined benefit plans are determined in accordance with
IAS 19 (Employee Benefits) using the projected unit credit method, under which the future
obligations are measured based on the pro rata benefit entitlements earned as of thebalance sheet date. Measurement reflects assumptions as to the trends in the relevant
variables affecting the level of benefits. All defined benefit plans require actuarial
valuations.
Owing to their benefit status, the obligations of US Group companies in particular inrespect of post-retirement medical care are also carried under provisions for pensions.
These post-retirement benefit provisions take into account the expected long-term rise in
the cost of healthcare.
Insofar as foreign Group companies have plan assets, these consist essentially ofstocks, fixed-interest bonds and real estate. Insurance cover forms the plan assets ofdomestic companies. The plan assets of the Group companies do not include any sharesin Voith AG.

Financial Report | 141

The following amounts related to defined
Folgende
benefit plans
Beträgearewurden
recognized
für Leistungszusagenin the balance sheet:in der Bilanz erfasst:€ in thousands

2009-09-30

2008-09-30

2007-09-30

Barwert der extern finanzierten Verpflichtungen2006-09-30

2005-09-30

Present value of funded obligations

190 976

180 915

199 407

185 602

204 419

Fair value of plan assets(118 429)(125 058)(137 260)(137 199)(137 751)

Shortfall

72 54755 85762 14748 40366 668Present value of unfunded obligations

418 976369 810373 292

404 184

367 538

Unrecognized actuarial gains and losses(61 592)(9 880)(31 152)(51 406)(29 958)

Unrecognized past service costs

(338)

0

92

0

0

Provision in the balance sheet

429 593415 787404 379401 181404 248

Thereof current

24 931

11 53222 12219 076

11 322The present value of defined benefit obligations comprises the following items:€ in thousands

2009-09-30

2008-09-30

Defined benefit obligation
at the beginning of the period

550 725

572 700

Current service costs

12 551

13 202

Interest expenses (pursuant to IAS 19)

32 15028 346

Actuarial losses (+)/gains (-)

40 295(32 724)

Past service costs

5 964

(58)

(19)

4 055

Changes in Group structure
Plan curtailments or settlements

241

120

(32 386)(31 260)

Other

5 719

912

Currency translation differences(5 288)(4 568)

Defined benefit obligation at
the end of the period

609 952

550 725

Benefits paid

142 | Voith Annual Report 2008/2009

The development of plan assets is shown in the table below:€ in thousands
Fair value of plan assets at the
beginning of the period
Expected return on plan assets
Actuarial gains(+)/losses(-)

2009-09-30

2008-09-30

125 058

137 260

9 397

9 343

(11 637)(11 290)

Contributions

7 105

3 124

Benefits paid

(9 608)(9 878)

Other

2 377

0

Currency translation differences(4 263)(3 501)

Fair value of plan assets
at the end of the period

118 429

125 058

The actual loss on invested plan assets amounted to € 2 240 thousand (previous year:€ 1 947 thousand).
The contributions that are expected to be paid into the plans in the next reporting
period amount to € 6 304 thousand (previous year: € 5 959 thousand).
The expected long-term interest yield on fund assets is calculated based on theportfolio’s actual long-term yields, on historical returns in the market as a whole, and on
forecasts of probable returns on the classes of securities held in the portfolio. These
forecasts are based on yield expectations for comparable pension funds for the remaining
service period (investment horizon) and on experience gathered by the managers of large
portfolios and experts in the investment industry.
Plan assets consist of the following components:in %2009-09-30

2008-09-30

Stocks

43%

43%

Bonds

41%

40%

Real estate

4%

6%

Other

12%

11%

100%

100%

Actuarial gains and losses are the result of changes in portfolios and in actual trends (e.g.
increases in income and pensions and changes in interest rates) that differ from underlying
assumptions.

Financial Report | 143

The following amounts are recognized in profit and loss:€ in thousands

2009-09-30

2008-09-30

Current service costs

12 551

13 202

Interest expenses on pension obligations

32 15028 346

Expected return on plan assets(9 397)(9 343)

Past service costs

5 626

34

Losses on plan curtailments or settlements

241

120

Realized actuarial gains or losses

514

(38)

Current service costs, past service costs, the effects of plan curtailments or settlements
and realized actuarial gains and losses that relate to defined benefit obligations are statedunder personnel expenses. In the period under review, part of past service costs is recognized in the non-recurring result. Expected returns on plan assets and realized actuarial
gains and losses that relate to the plan assets are recognized under other operating
expenses. Interest expenses on pension obligations are stated in the interest result.
The following assumptions underlie Voith Group’s calculation of pension provisions:
Germany and Austriain %2009-09-30

Discount rateUSA

2008-09-30

2009-09-30

2008-09-30

Deutschland5.5%& Österreich USA 6.0%

5.25%

6.0%

Expected return on plan assets

4.5%

4.5%

8.0%

8.0%

Salary increases

3.0%

3.0%

2.28%

2.6%

Pensions increases

2.0%

2.0%

0%

0%

8.0%/8.5%
5.0%

8.0%/9.5%
5.0%Annual increase in healthcare costs
Initial medical trend rate (pre-65/post-65)
Ultimate medical trend rate (pre-65/post-65)

If healthcare costs increased by 1%, current service costs and interest expenses would
increase by a total of € 58 thousand (previous year: € 59 thousand), while the present valueof pension obligations would increase by € 572 thousand (previous year: € 583 thousand).
If healthcare costs decreased by 1%, current service costs and interest expenses
would decrease by a total of € 47 thousand (previous year: € 48 thousand), while thepresent value of pension obligations would decrease by € 503 thousand (previous year:€ 513 thousand).

144 | Voith Annual Report 2008/2009

Experience-based adjustments – i.e. the effects of deviations between previous actuarial
assumptions and what actually occurred – are shown in the table below:in %2009-09-30

2008-09-30

2007-09-30

2006-09-30

2005-09-30

Difference between projected
Unterschiede
zwischen erwartetem und tatsächlichem Verlauf (+ Gewinne/- Verluste)
assumptions and actual values:(+ gains/- losses)- As a percentage of the present
value of defined benefit obligations(0.6%)(0.2%)

0%(0.5%)+2.8%- As a percentage of the fair valueof plan assets(9.8%)(8.2%)+1.9%(0.5%)+3.0%(21) OTHER PROVISIONS

The development of other provisions is shown below:

Stand€ in thousands

Changes in
as at
Group
Veränderung
In-anspruch2008-09-30
structure

Utilization

Additions

Currency
Discounting translation
as atZins-Transfers
Reversals
effect differences 2009-09-30

WähStand
Personnel-related
provisions

2008-09-30

105 324
Konsolidie-

Other tax provisions
rungsdif2009-09-30

8(28 645)
nahme
Zufüh-

35 115(17 290)
AuflöUmbueffekte (330)

374

(108)

94 4489 561

819(5 178)3 086(1 213)

(16)

0

228

7 287

Warranty provisions

186 675(217)(53 946)

106 214(43 829)

52

75

453

195 477

Other order-related
provisions

80 078301(28 204)

86 840(28 863)

(569)

249

(152)

109 680

45 342(130)(24 910)77 787(10 888)863

0(1 067)86 997426 980781(140 883)

309 042(102 083)

0

698

(646)

493 889

Other provisions

2009-09-30€ in thousands

2008-09-30< 1 year> 1 year< 1 year> 1 year

Personnel-related provisions

33 30561 14340 53464 790

Other tax provisions

2 948

4 339

6 946

2 615

Warranty provisions

147 71947 758137 449

49 226

Other order-related provisions

100 234

9 446

74 376

5 702

Other provisions

57 78029 21730 80414 538341 986

151 903290 109

136 871

Refund claims totaling € 5 172 thousand for order-related provisions were capitalized in
the period under review (previous year: € 0).
Early retirement and anniversary/long service provisions comprise the major portionof the personnel-related provisions. In the case of provisions for early retirement, theFinancial Report | 145

amount and maturity of the future payments to be made to the beneficiaries are uncertain.
Warranty provisions are accrued for statutory and contractual obligations as well as forextended warranty. Other order-related provisions include obligations for services still tobe rendered on customer orders, for service contracts and for commission provisions. In
these cases, the amount and timing of future expenses hinges on completion of the orders
concerned. Other provisions include items such as obligations arising from retrenchments
and restructuring measures. The latter activities are expected to be completed within thenext two fiscal years.

(22) FINANCIAL LIABILITIESFinancial liabilities include the following items:€ in thousands

2009-09-30

2008-09-30

Bonds

966 112679 145

Bank loans

291 649

175 285

Lease liabilities

4 915

5 860

Notes payable

17 936

12 675

Financial derivatives with hedged financialtransactions
Other financial liabilities

2 814

217

120 581

143 950

1 404 007

1 017 132

In the current period, liabilities totaling € 388 thousand (previous year: € 538 thousand)are secured by mortgages. Financial liabilities totaling € 869 thousand are secured byother assets (previous year: € 900 thousand).
The Voith Group’s current and non-current bonds and its bank loans are denominated in
the following currencies:
2009-09-30

2008-09-30

Euros

981 837

576 611

US Dollars

252 092

250 570

Swedish Krona

20 84221 400

Other currencies

146 | Voith Annual Report 2008/2009

2 990

5 849

1 257 761

854 430

Interest-bearing loans
Kurzfristig Langfristig

Effective interest ratein %Maturity

Carrying amountas at 2009-09-30€ in thousands

Carrying amountas at 2008-09-30€ in thousands

Current
SEK loan

0.25% + 0.25%

Indefinite

10 50021 400

NOK loan

Floating; currently 2.3%

2009 -11-30

1 184

0

Overdraft

Floating; currently 4%

Indefinite

0

1 686

Multi-currency poolInterbank offering
rates w/o margins(currently Stibor)Indefinite

9 813

29 705

RUB loan

Floating; currently
11.5%

2-monthrevolving

0

2 542

Industrial Revenue Bond

Floating; currently
7.65%

2009-06-01

0

5 465

3 installments
in 08/09(Dec., Mar., Sep.)

0

3 085

USD loan

USD LIBOR

Others

4 479

4 649

Total current

25 97668 532

Non-current€ 300 million bond, 2007/2017 /€ 300 million bond top-up, 2009/2017

5.50% 1)/6.642% 1)

2017-06-21

574 910297 424€ 200 million bond, 2001/2011

EURIBOR +1.65% 2)

2011-07-18

146 115145 631

USD 180 million private placement,
first tranche, 2004/2014

USD LIBOR in
arrears +0.785% 2)

2014-08-17

134 996

130 763

USD 85 million private placement,
second tranche, 2004/2016

USD LIBOR in
arrears +0.94% 2)

2016-08-17

64 29061 792

USD 60 million private placement,
third tranche, 2004/2019

USD LIBOR in
arrears +1.145% 2)

2019-08-17

45 80143 5354.509% 1)

2012-05-11

100 000

100 000

EUR 150 million note loan

6.671% 1)/2)

2014-05-06

149 4450

10 million bilateral bank loan

5.950% 1)

2014-09-28

10 0000Floating; currently
0.6% p. a.

2017-01-01

5 233

5 335

995

1 418

1 231 785

785 898

1 257 761

854 430

EUR 100 million loan

Industrial revenue bond
OthersTotal non-current1) Yield/effective interest rate.
2) Including the effect of related interest rate swaps.

The bonds and the USD private placement all have bullet maturities.
In the period under review, the € 300 million bond running from 2007 through 2017
was increased by a further € 300 million less a € 21 705 thousand discount. The market
value of this bond is € 579 270 thousand (previous year: € 278 250 thousand). This market
value is a stock market valuation.

Financial Report | 147

The market value of the € 100 million loan was € 102 191 thousand (previous year:€ 93 177 thousand) at the balance sheet date. A market interest rate of 4.42% (previous
year: 7.43%) was used to discount future cash flows when calculating the loan’smarket value.
The Voith Group took out five-year bank loans in the amount of € 160 million in fiscal
2008/09. The market value of these loans was € 171 598 thousand at the balance sheet
date. A market interest rate of 5.43% was used to discount future cash flows whencalculating the loan’s market value.
Since most other loans and financial liabilities have floating interest rates, their market
values roughly correspond to the carrying amounts.
Lease liabilities relate solely to finance lease obligations. Most of the underlying lease
contracts include a buy option. Finance lease liabilities are settled during the contractual
period and had the following maturities as at the balance sheet date:€ in thousands

2009-09-30

2008-09-30

Total future minimum
lease payments (gross)

5 991

6 846

Under 1 year

1 611

2 051

1 to 5 years

2 451

3 006

Over 5 years

1 929

1 789

Present value of future minimum
lease payments

4 915

5 860

Under 1 year

1 402

1 936

1 to 5 years

2 078

2 679

Over 5 years

1 435

1 245

Interest component of future
minimum lease payments

1 076

986

(23) TRADE ACCOUNTS PAYABLE/OTHER LIABILITIES€ in thousands

2009-09-30

2008-09-30

Trade accounts payable438 276521 728

Liabilities from customer-specificconstruction contracts

19 20917 570Financial derivatives with hedged
operational transactions

11 41057 083

Personnel and social security liabilities

225 280

218 119

Tax liabilities

126 398

136 788

Customer advances received

827 539873 876

Deferred income

24 761

23 272Other liabilities

148 | Voith Annual Report 2008/2009

221 117350 228

1 893 990

2 198 664€ 1 690 thousand (previous year: € 3 410 thousand) of trade accounts payable are not due
within a year.
At fiscal year-end, personnel and social security liabilities included outstanding
vacation benefits, overtime, annual bonus payments, and unpaid wages, salaries andsocial security contributions.
Sales tax (VAT) liabilities, whose fair value essentially corresponds to the carrying
amount, formed the main item in tax liabilities.
Government grants€ in thousands

2008/09

2007/08

10 570

6 723

Granted during the fiscal year

1 839

4 759

Amortized in profit and loss

(1 516)(912)

As at September 30

10 893

10 570As at October 1

Subsidies totaling € 10 699 thousand (previous year: € 10 365 thousand) were granted forcapital spending on property, plant and equipment. Subsidies totaling € 194 thousand(previous year: € 205 thousand) were granted for other expenses.
Government assistance totaling € 4 718 thousand (previous year: € 13 400 thousand)was received in fiscal 2008/09 in the context of the relocation of Voith subsidiaries in
China. Of this amount, € 9 049 thousand (previous year: 8 500 thousand) was recognizedin profit and loss.
In addition, further subsidies totaling € 1 988 thousand (previous year: € 0) were netted
against cost items.
In Brazil, government-subsidized export credits are granted to local Voith companies.

Financial Report | 149

Notes to theConsolidated
Cash Flow
Statement

In fiscal 2008/09, the change in investments in marketable securities were made up of
cash inflows totaling € 237 636 thousand (previous year: € 426 093 thousand) and cash
outflows totaling € 273 153 thousand (previous year: € 364 587 thousand).
Required information relating to the acquisition of consolidated companies is provided
in the section on “Business combinations in fiscal 2008/09.”
Cash and cash equivalents include checks, notes receivable, cash in hand andbalances in bank account.

Notes to the
Segment Report

INFORMATION ON THE SEGMENT DATA:

Besides the renaming of the Voith Hydro segment mentioned above, the fiscal year underreview also brought a change in segment presentation. The Group’s segments will in future
be presented in alphabetical order. However, these changes have no effect on the delimitation of the Voith Group’s segments, which remains unchanged from the structure presented
effective September 30, 2008.
Segment data is essentially compiled using the same accounting and valuation
methods as the consolidated financial statements. Intercompany sales are effected atmarket prices.
Segment assets and segment liabilities contain assets and liabilities that contributed
to realizing the operating result in the period under review.
To ensure that the figures for each segment remain comparable, interest-bearing receivables and payables that cannot be assigned to a specific segment are not included.
Accordingly, income and expenditure arising from these items did not affect the operating
result.

150 | Voith Annual Report 2008/2009

Investments include intangible assets and property, plant and equipment.
The regional breakdown of orders received and sales is based on the customer’s
domicile. Investments and segment assets are assigned to the location at which they
exist or are effected. In line with internal controlling and reporting practices, four specificregions – Germany, Europe excluding Germany, the Americas and Asia – are defined. Allother regional activities are reported under “Other.”

INFORMATION ON ACTIVITIES IN THESE SEGMENTS

Voith Hydro (formerly Voith Siemens Hydro Power Generation) – is a joint venturecompany that combines the strength of two leading hydro power component suppliers tocreate a leading, full-line supplier for hydro power plants. Its key products are Francis,
Pelton, Kaplan, bulb and pump turbines. The Group Division also produces generators andgenerator drive units for all kinds of turbines, as well as excitation and diagnostic systems,
frequency converters, insulation systems, switching systems for all voltages, andtransformers.
Voith Industrial Services – is one of the leading providers of technical, consulting andmanagement services in industrial contexts.
Voith Paper – is a leading provider of complete process lines for the papermaking
industry. As established process supplier to the paper industry worldwide, Voith has
amassed a wealth of experience covering everything from fiber technology throughprocessing to printing technology. Voith develops solutions that span the entire
papermaking process, from fiber to finished paper – and that for every type of paper:graphic grades, board, packaging papers, tissue paper and specialty papers. Voith is also
one of the global leading manufacturers of forming fabrics, wet felts and dryer fabrics forthe world’s cellulose and paper industry.
Voith Turbo – specializes in mechanical, hydrodynamic and electronic drive and braking
systems for road, rail, marine and industrial applications. Voith Turbo crafts customized
solutions ranging from individual machines to end-to-end process solutions.

Financial Report | 151

nach Geschäftsfeldern
Segment Information bySegmentinformationen
Division(siehe Excel Datei) Doppelseite
Voith Hydro€ in millions
External sales
Sales with other segments
Total segment sales

Voith Industrial Services

Voith Paper

2008/09

2007/08

2008/09

2007/08

2008/09

2007/08

1 085

800

1 018

983

1 743

1 984

1

3

61

56

65

44

1 086

803

1 079

1 039

1 808

2 028

Profit from operations

63

31

36

35

150

155

Operating interest income 2)

(15)

(12)

0

0

(9)

(9)

Other adjustments

0

0

0

(1)

(6)

0

Non-recurring result

0

0

(21)

1

(59)

(9)

Segment result 3)

48

19

15

35

76

137

Depreciation on intangible assets
and property, plant and equipment

17

14

20

20

70

63

Share of profits from associates

0

0

1

2

0

1

Investments 4)

58

47

14

28

93

107

Investments from newly
acquired subsidiaries

0

8

0

117

1

0

Total investments

58

55

14

145

94

107

Segment goodwill

14

13

207

192

218

218

Segment assets

775

684

524

599

1 378

1 635

Investments in associates
Segment liabilities
Capital employed 5)

0

0

4

4

10

9

850

737

237

307

1 062

1 278

345

314

220

186

801

835

ROCE 6)

18.3%

10.0%

16.4%

18.8%

18.7%

18.6%

Employees 7)

4 681

3 643

19 11822 8719 500

10 5481) Subtotal for Voith Hydro, Voith Industrial Services, Voith Paper and Voith Turbo.
2) Operating interest income from ordinary activities is defined as interest received by the company on the long-term financing of receivables from

customers or on that portion of customer advances that is not used to finance inventories and PoC receivables.
3) Segment result in accordance with IAS 14.
4) Excluding additions due to new acquisitions and financial assets.
5) Segment assets (excluding goodwill, including set-off of advances received for inventories) less segment liabilities (excluding provisions, accruals

and advances received), averaged out of cut-off date values from previous year, half year and financial statement.
6) ROCE: Return on capital employed (profit from operations divided by capital employed.)
7) Statistical number of persons employed at fiscal year-end.

152 | Voith Annual Report 2008/2009

Total Core Business 1)

Voith Turbo

Reconciliation

2008/09

2007/08

2008/09

2007/08

1 232

1 161

5 078

4 928

7

5

134

108

1 239

1 166

5 212

5 036

113

115

362

(1)

(1)

(25)

2008/09

Total

2007/08

2008/09

2007/08

5

6

5 083

4 934

(134)

(108)

0

0

(129)

(102)

5 083

4 934

336

(6)

(29)

356

307

(22)

0

0

(25)

(22)

0

0

(6)

(1)

0

0

(6)

(1)

(18)

0

(98)

(8)

0

0

(98)

(8)

94

114

233

305

(6)

(29)

227

276

39

38

146

135

8

9

154

144

0

1

1

4

1

0

2

4

78

83

243

265

12

16

255

281

0

3

1

128

0

0

1

128

78

86

244

393

12

16

256

409

138

136

577

559

0

0

577

559

1 114

1 063

3 791

3 981

54

48

3 845

4 029

2

2

16

15

1

0

17

15

549

519

2 698

2 841

120

200

2 818

3 041

85

64

718

653

2 084

1 988

15.7%

17.5%

17.4%

16.9%

5 428

5 307

38 72742 369

602

586

2 169

2 052

16.4%

14.9%

39 32942 955

Financial Report | 153

Segment Information bySegmentinformationen
Regionnach Regionen
Voith Group(siehe Excel Datei)
Orders received€ in millions

External sales

Investments

Segment assets

2008/09

2007/08

2008/09

2007/08

2008/09

2007/08

2008/09

2007/08

Germany

1 056
21%

1 391
23%

1 134
22%

1 187
24%

133
53%

155
55%

1 959
51%

2 090
52%

Europe excl.
Germany

1 408
29%

1 721
28%

1 481
29%

1 408
29%

29
11%

44
16%

701
18%

803
20%

Americas

1 445
29%

1 225
20%

1 163
23%

1 103
22%

52
20%

27
10%

815
21%

812
20%

Asia

949
19%

1 476
24%

1 216
24%

1 153
23%

40
16%

54
19%

351
9%

309
8%

Other

100
2%

279
5%

89
2%

83
2%

1
0%

1
0%

19
1%

15
0%

Total

4 958

6 092

5 083

4 934

255

281

3 845

4 029

Voith – Core Business
Orders received€ in millions

External sales

Investments

Segment assets

2008/09

2007/08

2008/09

2007/08

2008/09

2007/08

2008/09

2007/08

Germany

1 052
21%

1 387
23%

1 130
22%

1 183
24%

123
51%

141
53%

1 910
51%

2 048
52%

Europe excl.
Germany

1 407
29%

1 721
28%

1 481
29%

1 408
29%

28
12%

42
16%

697
18%

798
20%

Americas

1 445
29%

1 224
20%

1 162
23%

1 102
22%

51
21%

27
10%

814
21%

811
20%

Asia

949
19%

1 476
24%

1 216
24%

1 152
23%

40
16%

54
21%

351
9%

309
8%

Other

100
2%

279
5%

89
2%

83
2%

1
0%

1
0%

19
1%

15
0%

Total

4 953

6 087

5 078

4 928

243

265

3 791

3 981

154 | Voith Annual Report 2008/2009

The Segment Result Can Be Reconciled to the Figures in the Consolidated
Financial Statements as Follows:€ in millions

2008/09

2007/08

227

276

2

4

Interest result

(55)

(56)

Other financial result

(18)

2

Income before tax

156

226

Total segment results
Share of profit from associates

The Segment Assets and Liabilities Can Be Reconciled to the Figures in
the Consolidated Financial Statements as Follows:€ in millions

2008/09

2007/08

3 845

4 029

Financial assets and non-current securities

234

63

Income tax assets

57

51

Financial receivables

74

129

Total segment assets

Cash and cash equivalents

1 030

756

129

120

Total assets

5 369

5 148

Total segment liabilities

2 818

3 041

Financial liabilities

Deferred tax assets

1 404

1 017

Income tax liabilities

81

105

Deferred tax liabilities

112

123

4 415

4 286

Total liabilities

Financial Report | 155

Other Information

CONTINGENT LIABILITIES, CONTINGENT ASSETS AND
OTHER FINANCIAL OBLIGATIONSAppropriate provisions have been formed in the relevant Group companies to covercontingent liabilities arising from taxation, court and arbitration proceedings. Neither
Voith AG nor any of its consolidated companies are involved in any current or foreseeable
taxation, court or arbitration proceedings that could materially influence their economic
situation.
The Voith Group has contingent tax assets totaling approximately € 10 million (previous
year: € 5 million) outside Germany. In addition, the recognition for tax purposes of
expenses outside Germany totaling € 7 million is uncertain.

CONTINGENT LIABILITIESThe contingent liabilities listed below are stated at face value. No provisions were formed
to cover these contingencies as the risk of their realization is regarded as low.
€ in thousands

2009-09-30

2008-09-30

32 65223 050804

665

Guarantee obligations
Warranties
Assets pledged as security
for third-party obligations

Most of the guarantee obligations mature until 2015.

156 | Voith Annual Report 2008/2009

2 347

2 940

35 80326 655OTHER FINANCIAL OBLIGATIONSIn addition to liabilities, provisions and contingent liabilities, the Voith Group also has otherfinancial obligations, in particular those arising from rental and leasing agreements forbuildings, land, equipment, plant, machinery, and other non-production-related tools andequipment.
€ in thousands

2009-09-30

2008-09-30

Purchasing commitments
for capital expenditure

35 63454 954

Obligations arising from non-cancelable
operating rental and leasing agreements

132 317

118 945

Other obligations

2 106

1 083

170 057

174 982

Assets leased within the framework of operating rental and leasing agreements led to cash
outflows totaling € 63 116 thousand (previous year: € 56 832 thousand) in the period underreview. These payments were recognized as expenses and mostly related to leased
vehicles, machinery and buildings. The majority of leases run for between one and 17
years. Some companies have the option of extending their rental contracts.
The maturity of future minimum lease payments for non-cancelable operating rental andleasing agreements is shown below:€ in thousands

2009-09-30

2008-09-30– Due in under 1 year

39 71139 831– Due in 1 to 5 years

61 20466 813Nominal value of future minimum
lease payments– Due in over 5 years

31 40212 301132 317

118 945

A negligible amount is expected as sublease cash inflows from assets under operating
rental and lease agreements within the Group.
The “Other obligations” item consists essentially of maintenance agreements.

Financial Report | 157

ADDITIONAL INFORMATION ON FINANCIAL INSTRUMENTS
Carrying amounts, measurements and fair values for each category of instrument.
Tabelle Einteilung in Klassen (Excel-File)IAS 39measurement
category

Carrying
amount as at
2009-09-30

Balance sheet measurement policy in accordancewith IAS 39

Amortized
cost€ in thousands

Cost

Fair value
in equity

22 449277 716

Fair value in
profit and loss

Assets:Cash and cash equivalents

LaR

923 127

923 127

Trade accounts receivable

LaR

671 809671 809

Receivables from construction contracts

LaR

288 679

288 679

Other financial assets and marketable securities
Loans

323 861LaR

6 799

Financial assets available-for-sale

AfS

300 165

Financial assets held-for-trading

FAHfT

1 564

1 564

Financial assets at fair value throughprofit and loss

FAfvtpl15 33315 333Financial derivatives 2)

6 799

94 976

Derivatives without hedges
Derivatives with hedges

FAHfT
n.a.

Other receivables 2)

14 30114 30180 6752 217

78 458

119 764

Financial receivables

LaR

40 43440 434

Other financial assets

LaR

2 002

2 002

Other operating assets

LaR

77 32877 328Trade accounts payable

FLAC

438 276438 276

Bonds/bankloans/notes payables

FLAC

1 275 697

1 275 697

n.a.

4 915

Liabilities:

Financial liabilities from leasing contracts
Financial derivatives 2)

14 224

Derivatives without hedges

FLHfT

6 945

6 945

Derivatives with hedges

n.a.

7 279

Other financial liabilities 3)

FLAC

120 581120 581

Other liabilities 2)

FLAC

369 465369 465

LaR

2 010 178

2 010 178

2 895

4 384

IAS 39 measurement categories
Loans and receivables (LaR)
Available-for-sale (AfS)

AfS

300 165

Financial assets held-for-trading (FAHfT)

FAHfT

15 86515 865

Financial assets at fair value through profit
and loss (FAfvtpl)

FAfvtpl15 33315 333Financial liabilities measured at amortizedcost (FLAC)

FLAC

2 204 019

Financial liabilities held-for-trading (FLHfT)

FLHfT

6 945

Footnotes for 2008/09

22 449277 716

2 204 019

1)

Financial assets available-for-sale (AfS) include investments whose fair value could not be determined reliably.

2)

Other receivables and assets/other liabilities totaling € 363 775 thousand/€ 1 436 505 thousand reported in thebalance sheet include financial assets/financial liabilities totaling € 214 740 thousand/€ 383 689 thousand.

158 | Voith Annual Report 2008/2009

6 945

Balance sheet
measurement
policy inaccordancewith IAS 17

Fair value
2009-09-30

Carrying
amount as at
2008-09-30

Balance sheet measurement policy in accordancewith IAS 39
Amortized
cost

Cost

Fair value
in equity

Fair value in
profit and loss

Balance sheet
measurement
policy inaccordancewith IAS 17

Fair value
2008-09-30

923 127539 641539 641539 641671 809726 145726 145726 145288 679415 597415 597415 597

4 269

4 269

264 596
6 799

4 269

277 7161)

236 015

1 564

11 232

11 232

11 23215 33313 08013 08013 08018 20318 20334 59137 36930 816205 199 1)

205 199

55 57214 30180 67518 20337 3692 778

227 586
40 434107 367

107 367

107 367

2 002

2 675

2 675

2 675

77 328117 544

117 544

117 544438 276521 728521 728521 728

1 294 401

867 105

867 105

4 915

841 108

5 860

5 860

57 300
6 945

7 064

7 279

50 236120 581143 291

143 291

143 291

369 465487 160

487 160

487 160

1 913 238

1 913 238378

236 0157 064

49 85850 236205 199

29 43529 43513 08013 0802 019 284
7 064
Footnotes for 2007/08

30 816

7 064

2 019 284
7 064

1)

Financial assets available-for-sale (AfS) include investments whose fair value could not be determined reliably.

2)

Other receivables and assets/other liabilities totaling € 431 938 thousand/€ 1 659 365 thousand reported in
the balance sheet include financial assets/financial liabilities totaling € 283 158 thousand/€ 544 460 thousand.

3)

Other financial liabilities totaling € 143 950 thousand reported in the notes include customs duties totaling€ 659 thousand.

Financial Report | 159

Net gains and losses for each category of instrument:
2008/09€ in thousands
Loans and receivables (LaR)
Available-for-sale financial assets

Impairments

Other net
gains/losses

Total(50 613)(7 787)(58 400)

1 908(17 965)

Darlehen und Forderungen(19 873) (LaR)

Financial assets at fair value
through profit and loss

0

513

513

Held-for-trading financial assets

0(10 295)(10 295)

Financial liabilities at amortized cost

0

313

313

Impairments

Other net
gains/losses

Total

2007/08€ in thousands
Loans and receivables (LaR)(38 598)(4 317)(42 915)

Available-for-sale financial assets

(260)

5 177

4 917

Held-for-trading financial assets

0

4 842

4 842

Financial liabilities at amortized cost

0

2 330

2 330

RISK MANAGEMENT

Principles of Financial Risk Management
The Voith Group is a global player. In the course of its ordinary business, some of its
liabilities, assets and transactions are exposed to risks arising from changes in interest
rates and exchange rates. These risks could affect its assets, financial and earnings
position. The aim of financial risk management is therefore to pursue appropriate
operating and financial activities in order to manage and contain these market risks.
The principles of the Group’s financial policy are laid down by the Corporate Board ofManagement and monitored by the Supervisory Board. The Corporate Treasury
implements the financial policy and regularly reports to the Chief Financial Officer on thefinancial position of the Group, informing him of current risk exposures. Certain financialtransactions require special approval by the Corporate Board of Management.
External hedging tools are used depending on the risk situation. As a general rule, only
cash flow risks relating to existing transactions are hedged. Derivative financial
instruments are used to limit the risks arising both from operating business and from theresultant financing requirements. These instruments are used in accordance with clearly
defined, uniform, Group-wide guidelines. Compliance with these guidelines is verified on
an ongoing basis. The Group-wide guidelines define different levels of risk that necessitate

160 | Voith Annual Report 2008/2009

the varied use of risk prevention measures. Hedge transactions and highly liquid
investments are placed only with financial institutions that have first-class credit ratings.

Credit Risk
The Voith Group does business only with recognized, creditworthy third parties. We verify
the creditworthiness of all customers who wish to do credit-based business with us.
Liquid funds
Liquid funds consist essentially of cash, cash equivalents and marketable securities.
Default risks associated with term deposits are contained by selecting banking partners
that are verifiably solvent (ratings/deposit protection) and by spreading cash and cash
equivalents across multiple counterparties. Rating-linked limits are set for each bank.
Compliance with these limits is monitored.
Group companies trade in marketable securities only subject to the approval ofVoith AG, and even then only in the form of risk-averse cash equivalents.
In addition, Voith invests in marketable securities in the context of its strategic liquidity
reserve and has the associated risks monitored by an external advisor on the basis of adefined value-at-risk budget. Daily changes in the value of marketable securities aremonitored internally.
Trade accounts receivable
Credit risk arising from the delivery of goods and services expresses itself in terms ofcounterparty risk, manufacturing risks and political export-related risks. Handling of theserisks is governed by binding rules throughout the Voith Group. Credit risk is limited to thecarrying amount of trade accounts receivable, which is € 671 809 thousand (previous year:€ 726 145 thousand). The maximum default risk for receivables arising from long-term
construction contracts is € 288 679 thousand (previous year: € 415 597 thousand).
All orders above a defined value are subject to general risk assessment requirements.
Without special permission from the relevant governing bodies, Group companies do not
accept orders from customers whose credit rating falls below a defined threshold and who
cannot furnish an adequate guarantor.
As of a defined level based on Euler Hermes, steps must always be taken to hedge
political export risks. Further risk assessment is also activated for orders upward ofdefined values. Necessary securities are obtained via export credit agencies (ECAs) or on
the private insurance market.
If counterparties default in respect of the Group’s other financial assets (cash and cash
equivalents, available-for-sale financial assets and certain financial derivatives), the credit

Financial Report | 161risk is limited to the carrying amount of the instruments concerned. For details of financial
guarantees, please refer to the discussion of contingent liabilities. This kind of asset loss
can occur if individual business partners fail to meet their contractual obligations. As arule, no security exists for such eventualities.
The Voith Group is exposed to no material concentration of risks. Corporate policy is
to avoid limiting credit risk to a single financial institution. Instead, the Group invests witha variety of creditworthy financial institutions. Nor is the Group’s customer structurematerially concentrated in any particular geographic region. The Group tests for the
impairment of doubtful accounts in light of certain customers, historic trends, branchesof industry and various other information.
The following credit risks are factored into financial assets:

2009-09-30€ in thousands

Thereof not impaired but, at thebalance sheet date, overdue for

Thereofneither
impaired nor
overdueless than
90 days

between 90
and 180 days

more than
180 days

19 45018 27657

221

Gross value
2 Tabellen
mit extra Kasten im Kopf

Trade accounts receivable

717 544488 322

119 399

Other financial assets andmarketable securities

323 861323 590

271

Other receivables

124 950

119 425

827

Gross value

Thereofneither
impaired nor
overdueless than
90 days

between 90
and 180 days

more than
180 days

130 80218 40017 685

698

144

144

447

2008-09-30€ in thousands
Trade accounts receivable

758 506

556 119

Other financial assets andmarketable securities

264 596263 754

Other receivables

233 823220 105

Thereof not impaired but, at thebalance sheet date, overdue for

1 481

The carrying amount of liquid funds, receivables from construction contracts andderivatives is neither impaired nor overdue.

Liquidity Risk
To ensure that it can always meet its financial obligations, Voith has adequate cash lines
and has negotiated a syndicated credit facility with its banking partners.
Cash lines are used to cover short-term needs arising from fluctuations in working
capital. By contrast, the syndicated credit facility serves as a reserve out of which
temporary funding can be provided for significant investments. The long-term syndicatedcredit facility is available for 3.5 years and had not been drawn on at the balance sheet

162 | Voith Annual Report 2008/2009

date. To safeguard internal and external growth, Voith procures long-term funding on thecapital markets by issuing bonds and note loans. In addition to the existing bond in theUSA, Voith also issued a euro-denominated note loan in Germany to private investors in
the period under review.
Cash pools, intercompany loans and the allocation of external bank credit lines toindividual operating units protect Group companies’ liquidity. Voith AG produces liquidity
status reports for the entire Group once a month. The Corporate Treasury has daily accessto the balances of central bank and cash pool accounts and guarantees.
The table below lists the undiscounted, contractually agreed cash outflows arising fromfinancial instruments:
Cash flows < 1 year

€ in thousands

Balance as at
2009-09-30

Trade accounts
payable438 276

Bonds/bankloans/notes

1 275 697

Fixed
rate

Cash flows 1–5 years

Floating
rate Repayment

Fixed
rate

436 586
50 2599 630

43 785

Cash flows > 5 years

Floating
rate Repayment

177 183

18 079531 621

4 915

1 611

2 451

Financialderivatives

14 22425 705

7 462

Other financial
liabilities

120 581

Otherliabilities

369 465
2 223 158

591

72 003

10 221

893 390

Cash flows < 1 year

€ in thousands

Balance as at
2008-09-30

Trade accounts
payable521 728

Bonds/bankloans/notes

867 105286

313 700
51 495

Fixed
rate

177 469

18 079Fixed
rate

23 71320 56981 0205 285

704 980

1 929

44 70651 3124 950

598 408

88 6885 285

756 565

Cash flows > 5 years

Floating
rate Repayment

518 318

88 688

3 872

Cash flows 1–5 years

Floating
rate Repayment

Floating
rate Repayment

1 690

Financial liabilities
from leasing
contracts

1 236

Fixed
rate

Fixed
rate

Floating
rate Repayment

3 410
81 76856 743

246 658

60 48728 130532 627

Financial liabilities
from leasing
contracts

5 860

2 051

3 006

1 789

Financialderivatives

57 30061 75829 64740

Other financial
liabilities

143 291

4 562

39 639Otherliabilities

487 160

67 7502 413

2 082 444

1 232

1 318

99 09032080

417 598
24 94521 887 1 179 835

82 08856 823355 033

60 48728 130576 508

Financial Report | 163

Derivatives include cash outflows on financial derivatives with negative market values forwhich a gross cash flow settlement has been agreed. For these derivatives, cash outflows
stand against corresponding cash inflows. The previous table merely presents the cash
outflows. If the corresponding cash inflows were taken into account, the cash flows shownin the maturity analysis would be significantly lower. On the other hand, where a net cash
flow settlement is effected, cash outflows are netted against cash inflows.

Financial Market Risks
Foreign exchange risks
Global production and business activities expose the Voith Group to risks arising fromfluctuations in exchange rates. Foreign exchange risks exist in particular whereverreceivables, liabilities, cash and cash equivalents and orders (firm commitments/plannedtransactions) are or will be denominated in a currency other than the presentation currencyof the Group company concerned.
For the Voith Group, this happens above all with the US dollar. Changes in theexchange rate affect both earnings and Group equity. If the US dollar rises by 5%, thisreduces our pretax profits by € 14 380 thousand (previous year: € 14 618 thousand) andequity by € 8 908 thousand (previous year: € 11 302 thousand). Conversely, if the US dollar
falls by 5%, our pretax profits increase by € 12 996 thousand (previous year: € 13 226
thousand) and Group equity by € 7 914 thousand (previous year: € 9 869 thousand).
Most foreign exchange risks are recorded and managed centrally by Corporate
Finance. Transaction risks arising from the international delivery of goods and services arecontained by forward exchange contracts, plain vanilla currency options, currency swaps
and combinations of interest rate and currency swaps. Essentially, all foreign currencytransactions at the Voith Group must be hedged. Major items and orders on the balance
sheet (upward of a value of € 1 million) are hedged individually within the framework ofhedge accounting.
In the context of project business, both the hedge relationship and the objectives ofand strategies for risk management must be documented in respect of the underlying(hedged) transactions before external hedge transactions are agreed.
Hedges must be highly effective if they are to satisfy Voith’s risk management strategy.
Where hedge relationships are verifiably effective, the transactions achieve a hedge
accounting status. As a result, fluctuations in the exchange rate do not affect profit andloss, nor do they influence project costing.
At the Voith Group, financial derivatives are traded externally by Voith AG on behalfof its subsidiaries. The enterprise-wide treasury management tool is used for the central scheduling, monitoring and documentation of internal and external foreign
currency hedges.

164 | Voith Annual Report 2008/2009

Interest rate risks
The Voith Group’s exposure to interest rate risks is centrally analyzed and managed by
Corporate Finance. Medium- to long-term assets and liabilities with fixed interest rates
are the main source of interest rate risks at the Group, as changes in market rates ofinterest can cause the value of a financial instrument to fluctuate. Risks to the market
value of fixed-interest receivables and payables are hedged on a case-by-case basis.
Risks to market value are hedged by interest rate swaps and combined interest
rate/currency swaps, usually in the context of hedge accounting.
The relevant asset positions are essentially balances in banks accounts that areinvested in the money market and/or are used to fund the existing cash pool. The Voith
companies that participate in the cash pool operate a daily zero-balancing policy andtherefore have no exposure to external interest rate risks.
At Voith, marketable securities that are sensitive to interest rates are part of aninvestment strategy and are thus subject to strict risk monitoring (see the above
discussion of liquidity risk).
The Group raises funds by drawing on financial instruments with both fixed andfloating rates of interest.
On the cost side, interest rate risks arise from bonds placed on the capital market, aprivate placement in the USA, a euro-denominated note loan and a variety of bank loans.
The risk to cash flow arising from the private placement in the USA is hedged by interest
rate caps. Some of the bond coupons have been swapped from fixed to floating rates.
Ongoing analysis of effective interest payments and the trend in mid-swap rates withsimilar maturities form the basis for the option of realigning fixed- and floating-rate
obligations. By contrast, the newly issued note loan has been swapped from a floating toa fixed rate.

Financial Report | 165

The carrying amounts of those key financial instruments that are exposed to interest raterisks are grouped by contractually defined maturity in the following table:
2009-09-30€ in thousands

Under
1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

Total

Floating interest rates
Cash and cash
equivalents

zwei Tabellen
923 127

fest/variabel- verzinslich

-

-

-

-

923 127-

146 115--

134 996

110 091

391 202

25 976

211

93

150

110

5 664

32 204

Bonds

-

-

-

-

-

574 910574 910

Bank loans--

100 000-

159 445-259 445Under
1 year

1–2 years

2–3 years

3–4 years

4–5 years

Over 5 years

Total

539 641

-

-

-

-

-

539 641

Bonds
Bank loans
Fixed interest rates

2008-09-30€ in thousands
Floating interest rates
Cash and cash
equivalents
Bonds

236 090381 72168 532

220

218

398

150

5 767

75 285

Bonds

-

-

-

-

-

297 424

297 424

Bank loans

-

-

-

100 000-

100 000

Bank loans-

145 631

Fixed interest rates

If the market rate of interest had been 100 bps higher (lower) at September 30, 2009,
earnings would have been € 5.0 million (previous year: € 0.8 million) higher (lower). Equity
would have changed accordingly.
Risks relating to marketable securities and stock prices
Voith holds assets totaling € 100 million (previous year: € 99 million) in a multi-asset
portfolio. An external advisor monitors the risks to this portfolio based on a defined valueat-risk budget. The value at risk (VAR) indicates the maximum loss at a defined probability
level over a defined holding period. A rolling 260-day window supplies the information
about future returns and volatility levels that is needed to calculate the value at risk. The
confidence level is set at 95%. The holding period is set at ten days and, in a second
method, 260 days. The parameter settings indicate a probability of 95% that losses to theportfolio after ten days (260 days) will not exceed the defined value at risk. The current
95% value at risk is 0.28% (previous year: 4.1%) of the portfolio’s market value.
In addition, the Group holds mostly individual stocks with a total value of € 179 million(previous year: € 105 million). These investments are normally reported in the category“available-for-sale.” Accordingly, stock price risks are reflected on the balance sheet andnot in the consolidated statement of income, provided the criteria for impairment are notmet. A 10% change in the underlying stock prices would cause equity to change by 10%of the carrying amount of the stocks concerned.

166 | Voith Annual Report 2008/2009

It should be noted that all investment decisions are based on thorough analysis offundamental data. In the event of unusual stock price movements, existing stock pricerisks are analyzed immediately and suitable actions are taken.
Commodity price risks
Voith is indirectly exposed to risks arising from changes in commodity prices, as these
also affect the semimanufactures that we usually need. Corporate Purchasing regularly
reviews the nature, volume and scheduling of the Group’s material requirements.
Workgroups analyze this information in collaboration with the Corporate Treasury andidentify commodity volumes that require hedging. On request by Corporate Purchasing,suitable forward commodity contracts are arranged to contain any latent commodity pricerisks. In addition, increases in the price of materials can be passed on to customers tosome extent.

Hedge Relationships
The following items hedge the Group’s foreign exchange and interest rate risks:
2009-09-30€ in thousands

Nominal values1)< 1 year> 1 year

Positive market values< 1 year> 1 year

Forward exchange contracts (fair value hedges)

515 497

255 114

39 14815 331

3 494

890

Forward exchange contracts (cash flow hedges)

7 825

4 207

1 694

523

155

120

Interest rate swaps (fair value hedges)0

321 661

0

23 9790

0Interest rate swaps (cash flow hedges)0

148 000

0

0

0

2 620

Negative market values< 1 year> 1 year

Other derivatives

192 770286 079

5 856

8 445

4 963

1 982

Total

716 092

1 015 061

46 69848 278

8 612

5 612

2008-09-30€ in thousands

Nominal values1)< 1 year> 1 year

Positive market values< 1 year> 1 year

Negative market values< 1 year> 1 year

Forward exchange contracts (fair value hedges)

714 232

590 773

14 05310 11730 155

Forward exchange contracts (cash flow hedges)

10 364

8 935

1 457

1 321

378

0

0

326 6390

10 4210

0Interest rate swaps (fair value hedges)

19 703

Other derivatives

188 350

270 339

3 786

14 417

6 485

579

Total

912 946

1 196 686

19 29636 27637 01820 282

1) Nominal value refers to the volume of the hedged transactions in the local currency, translated at the exchange rate on the balance sheet date.

The reported interest rate swaps were concluded to hedge the fair value of the € 200
million bond running from 2001 through 2011, to hedge the fair value of the private
placements (fair value hedge) and to hedge the risk of changes in the rate of interest for
the note loan (cash flow hedge). As a result, the fixed interest rates agreed for the bonds
were converted to floating rates and the floating rate agreed for the note loan wasconverted to a fixed rate. The main terms and conditions agreed for the bonds and interest
rate swaps are identical.

Financial Report | 167

Fair value hedges
The Group uses fair value hedges primarily to hedge interest rate and foreign exchange risks.
In fiscal 2008/09, a gain of € 77 822 thousand (previous year: a loss of € 61 718
thousand) was recorded for financial derivatives classified as fair value hedges. Since thehedges were classified as highly effective, measurement of the hedged transactions at
the balance sheet date produced contrary results in the same amount.
The ineffective portions of hedges did not affect earnings in fiscal 2008/09 or 2007/08.
Changes in the value of financial derivatives that do not meet the requirements
defined for hedge accounting by IAS 39 are recognized in profit and loss at the balance
sheet date.
Cash flow hedges
At September 30, 2009, the Group held forward exchange contracts to hedge expected
future sales and purchases through 2011. These contracts relate to firm commitments.
Since 2009, the Group has also been using interest rate swaps to hedge interest rate risks
through 2014. Since the hedge relationships are documented, these forward exchange
contracts are classified as hedges in the context of cash flow hedging.
The main terms and conditions of the forward exchange contracts were negotiated inline with the terms and conditions agreed for the underlying transactions.
Hedge relationships designed to hedge cash flows from expected future sales wereclassified as highly effective. Accordingly, an unrealized loss of € 4 873 thousand (previous
year: € 9 402 thousand) was recognized in Group equity in revenue reserves.
Due to the realization of transactions in the course of the period under review, therelevant accumulated gains in the amount of € 1 764 thousand (previous year: losses of€ 285 thousand) were reclassified from revenue reserves to profit and loss.

168 | Voith Annual Report 2008/2009

RESEARCH AND DEVELOPMENT COSTS

In fiscal 2008/09, research and development costs totaled € 253 860 thousand (previous
year: € 250 473 thousand).
Of this amount, € 18 320 thousand (previous year: € 17 021 thousand) was capitalized
as development expenditure in the balance sheet. The remaining expenses consist of€ 171 229 thousand (previous year: € 170 465 thousand), which includes both scheduled
depreciation on these capitalized development expenses and activities for non-customerspecific new developments and improvements, as well as € 64 311 thousand (previous
year: € 62 987 thousand) for development activities capitalized in the context of customerspecific orders.

RELATED PARTY DISCLOSURESIn the course of its ordinary business activities, Voith AG maintains relationships both withthe subsidiaries listed in these consolidated financial statements and with other related
enterprises and individuals (holders of minority interests, family members who areshareholders, and members of the Supervisory Board and the Board of Management).
In fiscal 2007/08, one subsidiary of Voith AG was sold to family members who areshareholders in the context of a transaction under common control. This company, JMVGmbH & Co. KG, Heidenheim, is now the parent company of the Voith Group.
All business transactions with related enterprises and individuals are conducted atarm’s length on regular market terms and conditions.
Members of the Board of Management, members of the Supervisory Board of Voith
AG and family members who hold shares in the Group also serve on the supervisoryboards of other companies with which Voith maintains relationships in the course of its
ordinary business activities. Any transactions involving these companies are conducted
at arm’s length on the same terms and conditions as business with any unrelated third
parties.
A total of € 153 thousand (previous year: € 164 thousand) was paid at customarymarket rates to members of the Supervisory Board and former members of the Board ofManagement for consulting and other services.

Financial Report | 169

The majority of intercompany deliveries and services to related enterprises and individuals
are shown in the table below:€ in thousands

2008/09

2007/08

Liabilities to family members who are shareholders

37 76934 637

Services purchased from associated companies

1 511

1 386

Services rendered to associated companies

4 741

5 818

Receivables from associated companies

2 758

726

Liabilities to associated companies

3 939

1 342

705

3 886

Services rendered to other investments

13 35414 869Receivables from other investments

10 31415 293

Write-downs on receivables from other investments(1 181)(1 623)Liabilities to other investment

20 80428 966

Services purchased from the parent company

7 824

7 738

599

325

Services purchased from other investments

Services rendered to the parent company
Receivables from the parent company

514

538

Liabilities to the parent company

1 193

1 181

Liabilities to minority interests

65 466

103 625

Receivables from minority interests

7 697

36 908Services purchased from minority interests

69 43951 678Services rendered to minority interests

45 95144 449Liabilities to family members who are shareholders include current floating-rate clearing
accounts and pension obligations.
For more information on the profit participation rights granted in fiscal 2006/07(€ 76 800 thousand) and in fiscal 2008/09 (€ 6 600 thousand) to family members who areshareholders, please refer to note 19.
Research and development services in the amount of € 1 688 thousand (previous year:€ 1 800 thousand) were provided and charged to the Group by one related party.
A guarantee in the amount of € 12 146 thousand was assumed in fiscal 2008/09 on
behalf of an associated company.

170 | Voith Annual Report 2008/2009

COMPENSATION OF GOVERNING BODIES

Total compensation for members of the Board of Management of Voith AG, including
pension expenses, came to € 11 596 thousand in the period under review (previous year:€ 13 917 thousand). This amount includes long-term compensation components totaling€ 3 373 thousand (previous year: € 4 497 thousand). These long-term compensation
components include service costs totaling € 1 409 thousand (previous year: € 2 820
thousand).
The members of the Supervisory Board received compensation in the amount of € 406
thousand (previous year: € 388 thousand).
The present value of all defined benefit obligations in respect of current members of
the Board of Management was € 14 497 thousand at the balance sheet date (previous
year: € 11 692 thousand). The present value of all defined benefit obligations in respectof former members of the Board of Management was € 17 432 thousand (previous year:€ 16 885 thousand). Plan assets totaling € 10 246 thousand (previous year: € 10 340
thousand) have been formed for current and former members of the Board ofManagement. These amounts are stated in section 20 of the notes to the consolidated
financial statements.
€ 1 601 thousand (previous year: € 1 449 thousand) was spent on pension and otherpayments to former members of the Board of Management.

AUDITOR’S FEES AND SERVICES

The following fees (including compensation for expenses) were paid to the independent
auditor for services rendered in fiscal 2008/09:€ in thousands

2008/09

2007/08

2 182

2 126

Other auditing and valuation services

143

248

Tax advice

84

149

Audit of the consolidated financial statements

Other services

142

268

2 551

2 791

Financial Report | 171

EVENTS AFTER THE BALANCE SHEET DATE

Apart from the transactions outlined in this report, no further developments of material
importance have occurred since the close of fiscal 2008/09.

Heidenheim/Brenz, November 30, 2009
Voith AG
The Board of Management
Dr. Hubert Lienhard
Dr. Hermann Jung
Dr. Hans-Peter Sollinger
Peter Edelmann
Martin Hennerici
Bertram Staudenmaier
Dr. Roland Münch
Ernst & Young GmbH, Wirtschaftsprüfungsgesellschaft, Stuttgart, gave an unqualified
audit opinion on the consolidated financial statements of Voith AG for the fiscal year to
September 30, 2009, in the version for publication.

172 | Voith Annual Report 2008/2009

Responsibility Statement

We hereby state that, to the best of our knowledge, the consolidated financial statements
present a fair and accurate picture of the assets, financial, and earnings position of theGroup in accordance with relevant accounting principles, and that the management reportpresents a fair and accurate picture of the Group’s business development, its earnings,
and the position of the Group, as well as clearly portraying material opportunities and risks
to the future development of the Group.

Heidenheim/Brenz, November 30, 2009
Voith AG
The Board of Management
Dr. Hubert Lienhard
Dr. Hermann Jung
Dr. Hans-Peter Sollinger
Peter Edelmann
Martin Hennerici
Bertram Staudenmaier
Dr. Roland Münch

Financial Report | 173

The Voith Group and Its Shareholdings
as at 2009-09-30
Significant Associated Companies and Shareholdings

CapitalGroup sharein local currency
Voith AG, Heidenheim/Germany
Voith IT Solutions GmbH & Co KG, St. Pölten/Austria
J.M. Voith GmbH & Co. Beteiligungen KG, Heidenheim/Germany
Voith Assekuranz Vermittlung GmbH, Heidenheim/Germanyin %120 000 000

EUR

35 000EUR

44 600 000

EUR

100.0
100.0

51 129EUR

100.0Voith Financial Services GmbH, Heidenheim/Germany

25 000EUR

100.0Voith IT Solutions GmbH, Heidenheim/Germany

50 000EUR

100.0Voith Theta GmbH, Heidenheim/Germany

50 100

EUR

100.0

1

USD

100.0

Voith IT Solutions Inc., Wilson (NC)/United States
Voith Hydro Holding GmbH & Co. KG, Heidenheim/Germany *)Kössler Gesellschaft m.b.H., St. Georgen/Stfd./Austria

23 519 500

EUR

65.0

363 364

EUR

100.0
100.0

Voith Hydro GmbH & Co KG, St. Pölten/Austria

3 633 642

EUR

Voith Hydro da Amazonia Ltda., Manaus/Brazil

10 000BRL

99.9

42 962 560

BRL

100.0

Voith Hydro Ltda., São Paulo (SP)/Brazil
Voith Hydro Services Ltda., São Paulo (SP)/Brazil

1 000 000

BRL

100.0

Voith Hydro Inc., Brossard (QC)/Canada

16 114 850

CAD

100.0
100.0

Voith Hydro S.A., Santiago de Chile (Las Condes)/Chile

25 000 000

CLP

Voith Hydro Shanghai Ltd., Shanghai/China

43 333 667

USD

80.0

Voith Hydro s.r.o., Pilsen/Czech Republic

200 000

CZK

100.0

VH Auslandsbeteiligungen GmbH, Heidenheim/Germany

26 000EUR

100.0

VHG Auslandsbeteiligungen GmbH, Heidenheim/Germany

25 565EUR

100.0

15 441 100

EUR

100.0

100 000

EUR

80.0

200 000 000

INR

100.0
100.0

Voith Hydro GmbH & Co. KG, Heidenheim/Germany
Voith Hydro Ocean Current Technologies GmbH & Co. KG, Heidenheim/Germany
Voith Hydro Private Limited, Noida/India
Voith Hydro S.P.A., Cinisello Balsamo (MI)/Italy
Voith Fuji Hydro K. K., Kawasaki-shi, Kanagawa/Japan
Voith Hydro Mexico, S. de R.L. de C.V., Huixquilucan, Edo de Mexico/Mexico
Voith Hydro AS, Oslo/Norway

120 000

EUR

200 000 000

JPY

50.0

3 000

MXN

100.0

3 000 000

NOK

100.0

Voith Hydro Sarpsborg AS, Sarpsborg/Norway

530 000

NOK

100.0

Voith Hydro Lima S.A.C., Lima – San Isidro/Peru

1 000

PEN

100.0

680

RON

100.0
100.0

Voith Hydro S.R.L., Bucharest/Romania
Kössler Renewable Energy s.r.o., Trebisov/Slovakia

100 000

EUR

600 000 000

KRW

51.0

345 575

EUR

100.0

VG Power AB, Västeras/Sweden

1 200 000

SEK

51.0

Voith Hydro Limited Sirketi, Sögütözü Ankara/Turkey

1 000 000

TRY

100.0

Voith Hydro Wavegen Limited, Inverness/United Kingdom

1 349 496

GBP

100.0

1

USD

100.0

43 344 100

USD

100.0

Voith Hydro Tidal Co. Ltd., Seoul/South Korea
Voith Hydro S.L., Ibarra (Guipúzcoa)/Spain

Peak Hydro Services, Inc., Chattanooga (TN)/United States
Voith Hydro Inc., York (PA)/United States
Voith Industrial Services Holding GmbH, Heidenheim/Germany

500 000

EUR

100.0

Hörmann Industrietechnik GmbH, Steyr/Austria

35 000EUR

100.0

DIW Instandhaltung GmbH, Vienna/Austria

1 500 000

EUR

100.0

Voith Industrial Services Ermo Benelux N.V., Kapellen (Antwerp)/Belgium

1 137 500

EUR

90.0

Hörmann Mapal Fabricação e Afiação de Ferramentas Ltda., Pinhais – PR/Brazil

4 500 000

BRL

75.0

Premier Manufacturing Support Services of Canada Ltd., Markham (ON)/Canada

100

CAD

100.0

Hörmann CZ spol. s.r.o., Kosmonosy/Czech Republic

1 500 000

CZK

100.0

DIW Service s.r.o, Prague/Czech Republic

2 000 000

CZK

100.0

*) In the case of the Hydro companies, share held refers to Voith Hydro Holding GmbH & Co. KG, Heidenheim/Germany.

174 | Voith Annual Report 2008/2009

Significant Associated Companies and Shareholdings

CapitalGroup sharein local currency
Skandinavisk Industriservice A/S, Ringsted/Denmarkin %5 501 000

DKK

100.0

CeBeNetwork France SARL, Blagnac/France

75 000EUR

89.6

CeBeNetwork Services GmbH, Bremen/Germany

25 000EUR

90.0

CeBeNetwork WERUCON GmbH, Bremen/Germany

50 000EUR

90.0Voith Engineering Services GmbH, Bremen/Germany

250 000

EUR

90.0

Voith Engineering Services Holding GmbH, Bremen/Germany

250 000

EUR

90.0

Hörmann Engineering Personnel Services GmbH, Chemnitz/Germany

25 000EUR

100.0Voith Engineering Services GmbH, Chemnitz/Germany

950 000

EUR

100.0

100

EUR

100.0

41 312EUR

100.0

1 000 000

EUR

100.0

Spüldienste Niederbayern GmbH & Co. KG, Dingolfing/Germany
DIW Instandhaltung GmbH & Co. KG, Heidenheim/Germany
Voith Dienstleistungen GmbH, Heidenheim/Germany
Voith Industrial Services Paper GmbH & Co. KG, Heidenheim/Germany
Hörmann Industrietechnik GmbH, Kirchseeon/Germany
Voith Engineering Services GmbH, Ludwigshafen/Germany
Voith Industrial Services Ermo GmbH, Mainhausen/Zellhausen/Germany
Voith Industrial Services Ermo GmbH, Merseburg/Germany
Voith Industrial Services Industriefertigung GmbH, Radebeul/Germany

48 000EUR

100.0

12 071 500

EUR

100.0
100.0

200 000

EUR

1 600 000

EUR

100.0

357 904

EUR

100.0

25 000EUR

100.0

DIW Deutsche Industriewartung AG, Stuttgart/Germany

20 500 000

EUR

100.0

DIW Instandhaltung Ltd. & Co. KG, Stuttgart/Germany

15 525 000

EUR

100.0

50 000EUR

100.0

DIW Service GmbH, Stuttgart/Germany
Voith Industrial Services Energy GmbH & Co. KG, Stuttgart/Germany

250 000

EUR

100.0

Voith Industrial Services Ermo GmbH & Co. KG, Stuttgart/Germany

3.550 000

EUR

100.0

Voith Industrial Services Grundstücks GmbH & Co. KG, Stuttgart/Germany

25 000EUR

100.0Voith Industrial Services Mechanical Engineering GmbH & Co. KG, Stuttgart/Germany

657 631

EUR

100.0

1 529 000

EUR

100.0

25 000

EUR

100.0

100

EUR

100.0

Hörmann Györ Kft, Györ/Hungary

9 220 000

HUF

100.0

DIW Service Kft., Veszprém/Hungary

20 000 000

HUF

100.0

Voith Industrial Services India Private Limited, Hyderabad (A.P.)/India

19 600 000

INR

100.0

20 000EUR

100.0

1 000 000

NOK

40.0

500 000

PLZ

100.0

Hörmann Serwis Polska Sp. z. o.o., Poznan/Poland

2 250 000

PLZ

100.0

Voith Industrial Services O.O.O, St. Petersburg/Russian Federation

1 700 000

RUB

100.0

66 388EUR

100.0Voith Industrial Services Process GmbH & Co. KG, Stuttgart/Germany
Voith Industrial Services Wind GmbH, Stuttgart/Germany
Voith Industrial Services Indumont GmbH & Co. KG, Wesseling/Germany

Voith Railservices B.V., Twello/Netherlands
Terne AS, Mongstad/Norway
Premier Manufacturing Support Services Poland Sp. z. o.o., Gliwice/Poland

DIW Service s.r.o, Bratislava/Slovakia
DIW Wheel and tyre assembly s.r.o., Bratislava/Slovakia

6 639

EUR

100.0

Hörmann Slovakia spol. s.r.o., Bratislava/Slovakia

200 000

SKK

100.0

DIW Service d.o.o., Maribor/Slovenia

125 188

EUR

100.0

Premier Manufacturing Support Services Spain S.L., Coslada (Madrid)/Spain

803 006

EUR

100.0

Voith Industrial Services S.L., Coslada (Madrid)/Spain

10 000EUR

100.0

CeBeNetwork Dardo, S.L., Madrid/Spain

3 006

EUR

67.6

1 000 000

SEK

100.0

100 000

SEK

100.0

5 000

TRY

100.0

1

GBP

90.0

50 000

GBP

100.0

10

USD

100.0

3 000 000

USD

40.0

Newtec Kemiteknik AB, Gothenburg/Sweden
Premier Manufacturing Support Services AB, Trollhättan/Sweden
Voith Industrial Services Endüsti Hizmetleri Limited Sirketi, Yesilköy (Istanbul)/Turkey
CeBeNetwork UK Ltd., Bristol/United Kingdom
Premier Manufacturing Support Services (UK) Ltd., Warwick/United Kingdom
Premier Manufacturing Support Services Inc., Cincinnati (OH)/United States
EnovaPremier LLC, Louisville (KY)/United States

The Voith Group and Its Shareholdings | 175

Significant Associated Companies and Shareholdings

CapitalGroup sharein local currency
Voith Paper Holding GmbH & Co. KG, Heidenheim/Germanyin %30 703 400

EUR

100.0

12 000

ARS

100.0

100

AUD

100.0

Voith Paper Fabrics GmbH, Frankenmarkt/Austria

374 265

EUR

99.8

GAW Handel & Consulting GmbH, Graz/Austria

109 009

EUR

35.0

GAW technologies GmbH, Graz/Austria

44 722EUR

35.0Voith Paper Argentina S.A., Carapachay – Buenos Aires/Argentina
Voith Paper Australia and New Zealand Pty. Ltd., North Ryde (NSW)/Australia

Voith Paper Rolls GmbH & Co KG, Laakirchen-Oberweis/Austria

726 728

EUR

100.0

Voith Paper Automation GmbH & Co KG, St. Pölten/Austria

1 000 000

EUR

100.0

Voith Paper GmbH, St. Pölten/Austria

13 994 750

EUR

100.0

36 400EUR

100.0Voith Verfahrenstechnik GmbH & Co KG, St. Pölten/Austria

1 453 457

EUR

100.0

Voith Paper Rolls GmbH & Co KG, Wimpassing/Austria

3 270 278

EUR

100.0

Voith Mont Montagens e Serviços Ltda., Barueri (SP)/Brazil

3 389 223

BRL

100.0

GAW Sistemas e Technologia Ltda., São Paulo (SP)/Brazil

50 000BRL

29.8

Meri Sistemas e Tecnologia Ltda., São Paulo (SP)/Brazil

50 000BRL

55.3

Voith Fabrics do Brasil Representação Comercial Ltda., São Paulo (SP)/Brazil

128 390

BRL

100.0

Voith Unterstützungskasse GmbH, St. Pölten/Austria

Voith Paper Máquinas e Equipamentos Ltda., São Paulo (SP)/Brazil

37 269 872

BRL

100.0

Voith Fabrics Canada Holdings Ltd., Charlottetown/Canada

14 775 275

CAD

100.0

Voith Canada Inc., Hamilton (ON)/Canada

14 775 275

CAD

100.0

540 000

CAD

100.0

200

CAD

35.0

Servicios y Suministros Voith Chile Ltda., Concepción, Coronel/Chile

12 500 000

CLP

100.0

Voith Paper Rolls Guangzhou Co., Ltd., Guangzhou/China

100.0

PremiAir Technology Inc., Saint-Laurent-Québec/Canada
GAW Paper Coating Systems Limited, Vancouver (BC)/Canada

5 500 000USDGAW Trading (Kunshan) Ltd., Kunshan, Jiangsu/China

210 000

USD

35.0

Voith Paper (China) Co., Ltd., Kunshan, Jiangsu/China

6 250 000

USD

100.0

Voith Paper Fabrics (China) Co., Ltd., Kunshan, Jiangsu/China

15 000 000

USD

100.0

Voith Paper Rolls (China) Co., Ltd., Kunshan, Jiangsu/China

16 050 000

USD

100.0

Voith Paper Technology (China) Co., Ltd., Liaoyang City/China

100.0

13 320 000

USD

Voith Paper International Trading Co., Ltd., Shanghai/China

300 000

USD

100.0

Pikoteknik Oy, Parhalahti/Finland

33 638EUR

100.0Voith Paper Fabrics Oy, Vantaa/Finland
Voith Paper Oy, Vantaa/Finland
Voith Paper Fabrics SAS, Montbron/France
Voith Paper SAS, Orsay/France
Voith Paper Air Systems GmbH & Co. KG, Bayreuth/Germany

5 046

EUR

100.0

200 000

EUR

100.0

8 675 100

EUR

100.0

40 000

EUR

100.0

100

EUR

100.0

1 300 000

EUR

100.0

VF Auslandsbeteiligungen GmbH, Heidenheim/Germany

52 000EUR

100.0Voith Paper Automation GmbH & Co. KG, Heidenheim/Germany

25 000EUR

100.0

36 003 000

EUR

100.0

Voith Paper GmbH & Co. KG, Euskirchen/Germany

Voith Paper GmbH & Co. KG, Heidenheim/Germany
Voith Paper Rolls GmbH & Co. KG, Heidenheim/Germany

580 000

EUR

100.0

Voith Patent GmbH, Heidenheim/Germany

26 000EUR

100.0

VPS Auslandsbeteiligungen GmbH, Heidenheim/Germany

53 000EUR

100.0

VPT Auslandsbeteiligungen GmbH, Heidenheim/Germany

27 000EUR

100.0Voith Paper GmbH, Krefeld/Germany

603 000

EUR

100.0
100.0

Voith Paper Unterstützungskasse GmbH, Krefeld/Germany

26 000EUR

1 587 561

EUR

85.0

LSC Process- und Laborsysteme GmbH, Neuwied/Germany

26 076EUR

100.0

Aquatyx Wassertechnik GmbH, Ravensburg/Germany

25 000EUR

100.0

MERI Environmental Solutions GmbH, Ravensburg/Germany

51 129EUR

65.0

TechniDoc GmbH, Ravensburg/Germany

25 000EUR

35.0Voith Paper Krieger GmbH & Co. KG, Mönchengladbach/Germany

176 | Voith Annual Report 2008/2009

Significant Associated Companies and Shareholdings

CapitalGroup sharein local currency
Voith Paper Environmental Solutions GmbH & Co. KG, Ravensburg/Germany
Voith Paper Fiber & Environmental Solutions GmbH & Co. KG, Ravensburg/Germany
Voith Paper Hybrid Fiber GmbH, Ravensburg/Germany
Voith Paper Karton- und Verpackungspapiere Forschungs GmbH, Ravensburg/Germany

500 000

in %
EUR

100.0

30 303 134

EUR

100.0

26 000EUR

100.0

5 338 800

EUR

100.0

26 000EUR

100.0Voith Paper Technology (India) Ltd., Calcutta/India

29 999 900

INR

50.0

Voith Paper Fabrics India Ltd., Faridabad (Haryana)/India

43 925 590

INR

74.0

750 000

USD

100.0

Voith Paper Rolls GmbH & Co. KG, Weissenborn/Germany

PT. Voith Paper, Jakarta/Indonesia
PT. Voith Paper Rolls Indonesia, Karawang – West Java/Indonesia
RIF ROLL COVER SRL, Basaldella (Udine)/Italy
Voith Paper S.r.L., Schio (Vicenza)/Italy

3 570 000

USD

76.0

102 960

EUR

51.0
100.0

258 000

EUR

Voith IHI Paper Technology Co., Ltd., Tokyo/Japan490 000 000

JPY

49.0

Voith Paper Co., Ltd., Tokyo/Japan

100 000 000

JPY

100.0

Voith Paper Fabrics Japan Co. Ltd., Tokyo/Japan

10 000 000

JPY

100.0

Voith Paper Fabrics Asia Pacific Sdn. Bhd., Ipoh, Perak Darul Ridzuan/Malaysia

10 000 000

MYR

100.0

Voith Paper Fabrics Ipoh Sdn. Bhd., Ipoh, Perak Darul Ridzuan/Malaysia

56 000 000

MYR

100.0

250 000

MXN

45.5

3 409 533

MXN

100.0

Meri Sistemas Ambientales S.A. de C.V., Monterrey/Mexico
Voith Fabrics de Mexico SA de CV, Puebla, Pue Mexico/Mexico
Voith Paper Fabrics B.V., Haaksbergen/Netherlands

113 445

EUR

100.0

Voith Paper B.V., Vaassen/Netherlands

18 200EUR

100.0Voith Paper AS, Lier/Norway

4 401 000

NOK

100.0

100 000

NOK

100.0

Voith Fabrics Ltd., Coimbra/Portugal

7 482

EUR

100.0

Voith Paper Technology Russia GmbH, St. Petersburg/Russian Federation

10 000RUB

100.0Voith Paper Fabrics, S.A., Guissona (Lérida)/Spain

1 202 024

EUR

100.0

Voith Paper S.A., Ibarra (Guipúzcoa)/Spain

1 887 715

EUR

100.0

3 100

EUR

100.0

Voith Paper Fabrics Gusum AB, Gusum/Sweden

2 000 000

SEK

100.0

Voith Paper Fabrics Högsjö AB, Högsjö/Sweden

28 589 000

SEK

100.0

Voith Paper Fabrics Holding AB, Högsjö/Sweden

100 000

SEK

100.0

Voith Paper AB, Karlstad/Sweden

100 000

SEK

100.0

Voith Paper Rolls AB, Lessebo/Sweden

500 000

SEK

100.0

Voith Paper Walztechnik AG, Zurich/Switzerland

150 000

CHF

100.0

Voith Paper (Thailand) Co., Ltd., Bangkok/Thailand

7 500 000

THB

99.9

Voith Paper Fabrics Blackburn Ltd., Blackburn (Lancashire)/United Kingdom

14 400 000

GBP

100.0

Voith Paper Fabrics Holding Ltd., Blackburn (Lancashire)/United Kingdom

11 000 000

GBP

100.0

160 000

GBP

100.0

100

GBP

51.0

1 000 000

GBP

100.0

2 000

USD

65.0

625 750

USD

100.0

2 006 975

USD

100.0

10

USD

35.0

1 150 000

USD

100.0

Voith Paper Fabrics AS, Tranby/Norway

Voith Paper Services S.L., La Puebla de Alfinden, Saragossa/Spain

Voith Paper Fabrics Stubbins, Ltd., Bury (Lancashire)/United Kingdom
LSC Process & Laboratory Systems UK Ltd., Crieff/Perthshire/United Kingdom
Voith Paper Ltd., Manchester/United Kingdom
Meri Papertec Inc., Appleton (WI)/United States
Voith Paper Fabrics Appleton, Inc., Appleton (WI)/United States
Voith Paper Inc., Appleton (WI)/United States
GAW Paper Coating Systems Inc., Chicago (IL)/United States
Voith Papertec Green Bay Corporation, Green Bay (WI)/United States
Voith Paper Rolls Central Inc., Neenah (WI)/United States

100 000

USD

100.0

100

USD

100.0

Massachusetts PFE, Inc., Orange (MA)/United States

100 000

USD

100.0

PFS I, Inc., Salisbury (NC)/United States

100 000

USD

100.0

Voith Paper Fabrics Shreveport, Inc., Shreveport (LA)/United States

26 050 348

USD

100.0

Voith Paper Rolls West Inc., Springfield (OR)/United States

11 327 802

USD

100.0

PFR, Inc., Newark (DE)/United States

The Voith Group and Its Shareholdings | 177

Significant Associated Companies and Shareholdings

CapitalGroup sharein local currency
Syn Strand Inc., Summerville (SC)/United States
Voith Paper Fabrics Waycross, Inc., Waycross (GA)/United Statesin %641 649

USD

100.0
100.0

200

USD

5 626 990

USD

100.0

VAM Finance LLC, Wilmington (DE)/United States

178 412 527

USD

100.0

Voith Fabrics Wilson LLC, Wilson (NC)/United States

240 081 443

USD

100.0

300

USD

100.0

Voith Paper Rolls South Inc., West Monroe (LA)/United States

Voith Paper Fabrics US Sales Inc., Wilson (NC)/United States
Voith Paper Fabrics Wilson Limited Partnership, Wilson (NC)/United States

2 000

USD

100.0

Voith Paper Rolls Inc., Wilson (NC)/United States

2 857 891

USD

100.0

Voith Turbo GmbH & Co. KG, Heidenheim/Germany

25 601 000

EUR

100.0

650 000

AUD

100.0

Voith Turbo Pty. Ltd., Wetherill Park (NSW)/Australia
Voith Turbo Scharfenberg Pty. Ltd., Wetherill Park (NSW)/Australia
Voith Turbo GmbH, St. Pölten/Austria

400 000

AUD

100.0

3 300 000

EUR

100.0

Voith Turbo Vertriebs GmbH, St. Pölten/Austria

40 000EUR

100.0Voith Turbo S.A./N.V., Brussels/Belgium

300 000

EUR

100.0

Voith Turbo Automotive Ltda., São Paulo (SP)/Brazil
Voith Turbo Ltda., São Paulo (SP)/Brazil
Voith Turbo Inc., Mississauga (ON)/Canada
Voith Turbo S. A., Santiago de Chile (Conchali)/Chile
Voith Turbo Limited, Hong Kong/China

1 000

BRL

99.9

5 250 568

BRL

100.0
100.0

1 021

CAD

38 250 000

CLP

100.0

650 000

HKD

100.0

Voith Schaku KTK Coupler Technology Co., Ltd., Shanghai/China

2 000 000

EUR

50.0

Voith Turbo Power Transmission (Shanghai) Company Ltd., Shanghai/China

6 916 000

CNY

100.0

Voith Turbo Colombia Limitada, Bogota D.C./Colombia

540 000 000

COP

100.0

Voith Turbo d.o.o., Zagreb/Croatia

20 000HRK

100.0Voith Turbo Ltd., Limassol/Cyprus

16.617EUR

100.0

1 000 000

CZK

100.0

700 000

DKK

100.0
100.0

Voith Turbo s.r.o., Brno/Czech Republic
Voith Turbo A/S, Gadstrup/Denmark
Voith Turbo SAS, Noisy-le-Grand Cedex/France

2 072 000

EUR

Amovis Forschung und Entwicklung GmbH, Berlin/Germany

25 000EUR

25.2

Amovis GmbH, Berlin/Germany

25 000

EUR

25.2
100.0

Voith Turbo Hochelastische Kupplungen GmbH & Co. KG, Essen/Germany
Voith Turbo Aufladungssysteme GmbH & Co. KG, Gommern/Germany
LZH Logistic Zollservice Heidenheim GmbH, Heidenheim/Germany

200 000

EUR

2 500 000

EUR

96.0

51 000EUR

32.6

Voith Turbo Antriebstechnik Beteiligungen GmbH, Heidenheim/Germany

25 565EUR

100.0Voith Turbo Auslandsbeteiligungen GmbH, Heidenheim/Germany

51 129EUR

100.0Voith Turbo Lokomotivtechnik GmbH & Co. KG, Heidenheim/Germany

2 500 000

EUR

100.0

Voith Turbo Schneider Propulsion GmbH & Co. KG, Heidenheim/Germany

2 582 050

EUR

100.0

100 000

EUR

51.0

Voith Turbo Vertriebsgesellschaft mbH, Heidenheim/Germany

5 114 000

EUR

100.0

Voith Turbo Wind GmbH & Co. KG, Heidenheim/Germany

1 000 000

EUR

100.0

1

EUR

100.0

ACIDA GmbH, Herzogenrath/Germany

200 000

EUR

99.0

AIR Fertigung-Technologie GmbH & Co. KG, Hohen Luckow/Germany

50 000EUR

85.0Voith Turbo Marine Engineering GmbH & Co. KG, Rostock/Germany

100 000

EUR

100.0

154 000

EUR

50.0

6 100 000

EUR

100.0

Voith Turbo SMI Technologies GmbH & Co. KG, Heidenheim/Germany

Voith Turbo Zollzweckgemeinschaft GbR, Heidenheim/Germany

Micromat Spannhydraulik GmbH, Rutesheim/Germany
Voith Turbo H+L Hydraulic GmbH & Co. KG, Rutesheim/Germany
Voith Turbo Scharfenberg GmbH & Co. KG, Salzgitter/Germany

5 113 000

EUR

100.0

Voith Turbo BHS Getriebe GmbH, Sonthofen/Germany

3 038 000

EUR

100.0

283 000

EUR

100.0

5 000

EUR

94.0

Voith Turbo BHS Getriebe Holding GmbH & Co. KG, Sonthofen/Germany
Devisoris Grundstücksverwaltungsgesellschaft mbH & Co. Vermietungs KG, Wiesbaden/Germany

178 | Voith Annual Report 2008/2009

Significant Associated Companies and Shareholdings

CapitalGroup sharein local currency
Voith Turbo Verdichtersysteme GmbH & Co. KG, Zschopau/Germany
Voith Turbo Kft., Biatorbágy/Hungaryin %125 000

EUR

100.0
100.0

285 250 000

HUF

Voith Turbo Private Limited, Hyderabad (A.P.)/India

7 349 986

INR

100.0

Voith Turbo Drive Systems s.r.l., Montichiari/BS/Italy

100 000

EUR

100.0

Voith Turbo s.r.l., Reggio Emilia/Italy

1 200 000

EUR

100.0

Voith Turbo Co., Ltd., Kawasaki-shi, Kanagawa/Japan

38 000 000

JPY

100.0

Nippon Retarder System Co., Ltd., Osaka/Japan

50 000 000

JPY

50.0

Voith Turbo Sdn. Bhd., Kuala Lumpur/Malaysia

1 000 000

MYR

100.0

Voith Turbo S.A. de C.V., Mexico (D.F.)/Mexico

2 474 095

MXN

100.0

Voith Turbo S.A., Casablanca/Morocco

4.000 000

MAD

100.0

Ox-traction (Locomotives) N.V., Roosendaal/Netherlands

45 000EUR

46.0

Ox-traction N.V., Roosendaal/Netherlands

200 000

EUR

46.0

Voith Railservices B.V., Twello/Netherlands

20 000EUR

100.0Voith Turbo B.V., Twello/Netherlands

18 000EUR

100.0Voith Turbo Drive Systems B.V., Twello/Netherlands

29 220EUR

100.0Voith Turbo Holding B.V., Twello/Netherlands

703 813

EUR

100.0

Voith Turbo AS, Oslo/Norway

273 600

NOK

100.0

Voith Turbo sp. z o.o., Wola Krzysztoporska/Poland

250 000

PLZ

100.0

Voith Turbo S.R.L., Bucharest/Romania

183 950

RON

100.0

Voith Turbo Kazan GmbH, Kazan/Russian Federation

14 400 000

RUB

91.0

Voith Turbo O.O.O., Moscow/Russian Federation

10 000RUB

100.0Voith Turbo d.o.o., Belgrade/Serbia

151 015RSD

50.0Conquest Timber-Tec PTE Limited, Singapore/Singapore

30 000SGD

100.0Voith Turbo Pte. Ltd., Singapore/Singapore

507 330

SGD

100.0

Imfuyo Air Products (Proprietary) Limited, Bedfordview/South Africa

10 000ZAR

23.6

Imfuyo Projects (Pty) Ltd., Benoni/South Africa

100

ZAR

47.0

Imfuyo Locomotives (Proprietary) Limited, Parktown/South Africa

100

ZAR

47.0

Voith Property Company (Pty) Ltd., Witfield (Boksburg)/South Africa

100

ZAR

100.0
100.0

Voith Turbo (Pty) Ltd., Witfield (Boksburg)/South Africa

127 572ZAR

337 500 000

KRW

80.0

Voith Turbo S.A., Coslada (Madrid)/Spain

1 500 000

EUR

100.0

Voith Turbo Safeset AB, Hudiksvall/Sweden

2 000 000

SEK

100.0

Voith Turbo AB, Spanga-Stockholm/Sweden

3 475 000

SEK

100.0

200 000

CHF

100.0

Voith Turbo Co., Ltd., Seodaemun-Gu (Seoul)/South Korea

H + L Holding AG, Baar/Switzerland
Hartmann + Lämmle AG, Neuheim/Switzerland

250 000

CHF

100.0

5 500 000

TWD

100.0

Voith Turbo Güç Aktarma Teknigi Ltd. Sti., Çankaya-Ankara/Turkey

100 000

TRL

100.0

Voith Turbo Ukraine TOW, Kiev/Ukraine

50 000EUR

100.0Voith Turbo Co. Limited, Kaohsiung/Taiwan

Voith Middle East FZE, Dubai/United Arab Emirates

1 000 000

AED

100.0

H + L Hydraulic Ltd., Croydon (Surrey)/United Kingdom

260 000

GBP

100.0

Voith Turbo Limited, Croydon (Surrey)/United Kingdom

5 000 000

GBP

100.0

12 000GBP

100.0Voith Turbo Rail Systems Ltd., Croydon (Surrey)/United Kingdom
BHS Getriebe Inc., Cincinnati (OH)/United States
Voith Turbo Inc., York (PA)/United States

1 500

USD

100.0

2 150 000

USD

100.0

The Voith Group and Its Shareholdings | 179

Your Contact to Voith
Holding Company

Public Relations

Investor Relations

Phone: +49 7321 37-0

Phone: +49 7321 37-2219

Phone: +49 7321 37-2332

Fax: +49 7321 37-7000

Fax: +49 7321 37-7108

Fax: +49 7321 37-7010

E-mail: info@voith.com

E-mail: info@voith.com

E-mail: info@voith.com

Voith Hydro

Voith Industrial Services

Voith Paper

Voith Turbo

Phone: +49 7321 37-6848

Phone: +49 711 7841-170

Phone: +49 7321 37-2888

Phone: +49 7321 37-2832

Fax: +49 7321 37-7828

Fax: +49 711 7841-179

Fax: +49 7321 37-7008

Fax: +49 7321 37-7110

E-mail: info.voithhydro@voith.com

E-mail: info.industrialservices@voith.com

E-mail: info.voithpaper@voith.com

E-mail: info.voithturbo@voith.com

Imprint
Publisher
Voith AG, P.O. Box 2000, 89510 Heidenheim/Germany
Phone: +49 7321 37-0
Fax: +49 7321 37-7000
E-mail: info@voith.com
www.voith.com
Editorial
Voith AG, Corporate Communications, Heidenheim/Germany
Publishing Company
BurdaYukom Publishing GmbH, Konrad-Zuse-Platz 11, 81829 Munich/Germany
www.burdayukom.de
Imagesp. 30 iStock; p. 31 Fotolia/Klaus-Peter Adler; pp. 34/35 LOOK/age-fotostock;p. 36 laif/Martin Roemers; p. 38 DB Mobility Logistics AG.
Other images: Voith Archive.
PrinterC. Maurer Druck und Verlag, Schubartstrasse 21, 73312 Geislingen/Germany
www.maurer-online.de
The emissions caused by the production of this annual report were counterbalanced by investments in the WWF Gold Standard climate protection project“Wind Park at the Lower End of the Hwangho.”
Identity number 093012
The paper for this annual report was produced on a Voith paper machine.
Printed in Germany | © Voith AG | 2010-01
This annual report is also available in German. Both versions, as well as press
releases and other information, can also be downloaded from the Internet atwww.voith.com.

The Voith Group in Figures

Annual Report 2008/2009

Annual Report 2008/2009

2008/09

2007/08

Orders received

4 958

6 092

Sales

5 083

4 934

Profit from operations*
Return on sales in %

356
7.0

307
6.2

Income before tax

156

226

Net income

77

144

Total cash flow

370

85

Investments

255

281

Research and development
in % of sales

254
5.0

250
5.1

Equity954

862

Balance sheet total

5 369

5 148

Employees(without apprentices)

39 32942 955€ in millions* See the segment report in the notes to the consolidated financial statement.